Federal Communications Commission FCC 13-92
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Applications of SOFTBANK CORP., Starburst II,
Inc., Sprint Nextel Corporation, and Clearwire
Corporation
For Consent to Transfer Control of Licenses and
Authorizations
Petitions for Reconsideration of Applications of
Clearwire Corporation for Pro Forma Transfer of
Control
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IB Docket No. 12-343
ULS File Nos. 0005480932, et al.
MEMORANDUM OPINION AND ORDER, DECLARATORY RULING,
AND ORDER ON RECONSIDERATION
Adopted: July 3, 2013 Released: July 5, 2013
By the Commission: Acting Chairwoman Clyburn and Commissioner Pai issuing separate statements.
TABLE OF CONTENTS
Heading Paragraph #
I. INTRODUCTION.................................................................................................................................. 1
II. BACKGROUND.................................................................................................................................... 5
A. Description of the Applicants .......................................................................................................... 5
1. SoftBank Corp. and Starburst II, Inc. ........................................................................................ 5
2. Sprint Nextel Corporation ......................................................................................................... 8
3. Clearwire Corporation............................................................................................................. 10
B. Description of the Transactions ..................................................................................................... 12
1. SoftBank Acquisition of Sprint Nextel.................................................................................... 12
2. Sprint Nextel Acquisition of Clearwire................................................................................... 15
C. Transaction Review Process .......................................................................................................... 18
III. STANDARD OF REVIEW.................................................................................................................. 23
IV. QUALIFICATIONS OF APPLICANTS ............................................................................................. 26
V. POTENTIAL PUBLIC INTEREST HARMS...................................................................................... 34
A. Overview........................................................................................................................................ 34
B. Market Definitions......................................................................................................................... 36
C. Competitive Analysis of the Proposed Transactions ..................................................................... 44
1. Background ............................................................................................................................. 45
2. Discussion ............................................................................................................................... 52
D. Other Issues.................................................................................................................................... 62
VI. POTENTIAL PUBLIC INTEREST BENEFITS ................................................................................. 91
A. Analytical Framework ................................................................................................................... 92
B. Asserted Benefits ........................................................................................................................... 94
Federal Communications Commission FCC 13-92
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C. Discussion.................................................................................................................................... 102
VII. FOREIGN OWNERSHIP AND PETITION FOR DECLARATORY RULING............................. 103
A. Review of Foreign Ownership of Common Carrier Wireless Licenses....................................... 105
B. Attributable Foreign Ownership Interests.................................................................................... 114
C. Declaratory Ruling....................................................................................................................... 123
VIII. NATIONAL SECURITY, LAW ENFORCEMENT, FOREIGN POLICY, AND TRADE
CONCERNS....................................................................................................................................... 125
IX. ORDER ON RECONSIDERATION ................................................................................................. 132
X. CONCLUSION .................................................................................................................................. 155
XI. ORDERING CLAUSES..................................................................................................................... 156
APPENDIX A – List of Applications
APPENDIX B – List of Filings
I. INTRODUCTION
1. In this Memorandum Opinion and Order, Declaratory Ruling, and Order on
Reconsideration, we consider the applications of SOFTBANK CORP. (“SoftBank”), its indirect
subsidiary Starburst II, Inc. (“Starburst II”), and Sprint Nextel Corporation (“Sprint” and, together with
SoftBank and Starburst II, the “Applicants”) for Commission consent to transfer control to SoftBank and
Starburst II of various wireless licenses and leases, domestic and international section 214 authorizations,
earth station authorizations, interests in submarine cable licenses, and cable television relay service
station licenses held by Sprint and its subsidiaries, and the various wireless licenses and leases held by
Clearwire Corporation (“Clearwire”).
1
The Applicants also request a declaratory ruling that it is in the
public interest for the foreign ownership of Sprint and its licensee subsidiaries to exceed the 25 percent
foreign ownership benchmark in section 310(b)(4) of the Communications Act of 1934, as amended (the
“Act”).
2
2. Based on the record before us and our review of the competitive effects of the proposed
transactions – the acquisition of Sprint by SoftBank and Sprint’s acquisition of 100 percent of the stock of
Clearwire – we find that approval of the transactions will serve the public interest. We note at the outset
that the investment by SoftBank in the U.S. market differs from wireless transactions in which two
domestic competitors with overlapping service areas or spectrum holdings are seeking approval to merge,
thereby eliminating an existing competitor. Rather, SoftBank, which has no attributable interests in any
spectrum licenses in the United States, is seeking approval, inter alia, to use approximately $16.64 billion
to purchase shares from existing Sprint shareholders, and plans to provide an additional $5 billion to
Sprint that it can invest in its network and use to provide wireless broadband service.
3
1
See SoftBank and Sprint Seek FCC Consent to the Transfer of Control of Various Licenses, Leases, and
Authorizations From Sprint to SoftBank, and to the Grant of a Declaratory Ruling Under Section 310(b)(4) of the
Communications Act, IB Docket No. 12-343, Public Notice, DA 12-1924, 27 FCC Rcd 14924 (Int’l Bur. 2012)
(“Nov. 30, 2012 Public Notice”). Applicants amended the applications to reflect an agreement by Sprint to acquire
the remaining shares of Clearwire that Sprint does not already own, on the condition that the Commission approves
SoftBank’s applications to acquire control of Sprint. See SoftBank and Sprint File Amendment to Their Previously
Filed Applications to Reflect Acquisition of De Facto Control of Clearwire, IB Docket No. 12-343, Public Notice,
DA 12-2090, 27 FCC Rcd 16056 (Int’l Bur. 2012) (“Dec. 27, 2012 Public Notice”).
2
47 U.S.C. § 310(b)(4); Petition for Declaratory Ruling, File No. ISP-PDR-20121115-00007 (“Petition”); see also
Nov. 30 2012 Public Notice, 27 FCC Rcd at 14931-32.
3
Letter from Regina M. Keeney, counsel for Sprint, and John R. Feore, counsel for SoftBank, Starburst I, and
Starburst II, to Marlene H. Dortch, Secretary, FCC at 1, dated June 11, 2013 (“Applicants June 11, 2013 Ex Parte”).
Federal Communications Commission FCC 13-92
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3. We find that these proposed transactions are not likely to result in competitive or other
public interest harms in the provision of mobile wireless services. In addition, we anticipate that the
proposed transactions likely will result in key public interest benefits, acceleration of deployment of
advanced mobile broadband services and enhanced competition in the mobile wireless market, through
the increased investment by Softbank in the Sprint and Clearwire networks.
4. Further, we find that the indirect foreign ownership of Sprint and its licensee subsidiaries
by SoftBank complies with section 310(b)(4) of the Act. Finally, in response to petitions for
reconsideration, we affirm that the Wireless Telecommunications Bureau (the “Wireless Bureau”)
properly processed as pro forma the applications that were filed to effectuate the transfer of the shares in
Clearwire held by Eagle River Holdings, LLC to Sprint. Thus, we conclude that the transactions are in
the public interest, and we approve them subject to the conditions contained herein.
II. BACKGROUND
A. Description of the Applicants
1. SoftBank Corp. and Starburst II, Inc.
5. SoftBank is a publicly traded holding company organized and existing under the laws of
Japan. SoftBank and its subsidiaries are engaged in various information technology and Internet-related
businesses in Japan, including mobile communications, broadband infrastructure, fixed-line
telecommunications, e-commerce, and web portals. SoftBank also invests in Internet-based companies
throughout the world. SoftBank’s wholly owned subsidiary, SOFTBANK MOBILE Corp. (“SoftBank
Mobile”), is the third largest wireless carrier in Japan, with approximately 30.5 million wireless
subscribers, giving it approximately 22 percent of the Japanese market as of September 30, 2012.
4
SoftBank also provides wireline broadband and telecommunications services in Japan through two wholly
owned subsidiaries, SOFTBANK BB Corp. (“SoftBank BB”) and SOFTBANK TELECOM Corp.
(“SoftBank Telecom”).
5
6. SoftBank has no attributable interests in any spectrum licensees in the United States.
SoftBank’s only telecommunications interest in the United States is Japan Telecom America Inc.
(“JTA”), a wholly owned subsidiary of SoftBank Telecom, which holds an international section 214
authorization.
6
JTA provides limited private line services to its sole customer, SoftBank Telecom, and
has no U.S. customers. SoftBank Telecom also holds minority interests in a number of submarine cables,
including the cable landing station in Maruyama, Japan used for the Japan-U.S. Cable and the Australia-
Japan Cable.
7
7. Starburst II is an indirect wholly owned subsidiary of SoftBank. It is a Delaware
corporation that was created specifically in connection with this transaction.
8
4
Applications of Sprint Nextel Corporation, Transferor, and SoftBank Corp., and Starburst II, Inc., Transferees, for
Consent to Transfer of Control of Licenses and Authorizations, IB Docket No. 12-343, Public Interest Statement, at
5 (“Public Interest Statement”).
5
Id. at 4-5. SoftBank BB provides residential wireline broadband service to approximately 4.22 million customers
in Japan, and SoftBank Telecom provides direct connection service to approximately 1.7 million primarily corporate
subscribers in Japan. Id. at 5.
6
ITC-214-19970307 (old file number ITC-97-146), ITC-214-19970804-00461 (old file number ITC-97-449), and
ITC-214-20040129-00035.
7
Public Interest Statement at 6.
8
Id.
Federal Communications Commission FCC 13-92
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2. Sprint Nextel Corporation
8. Sprint is a publicly traded Kansas corporation. Through its subsidiaries, it offers a range
of wireless and wireline voice and data products and services in all 50 states.
9
Sprint is the third largest
mobile wireless service provider in the United States with over 56 million customers.
10
In addition,
Sprint subsidiaries hold domestic and international section 214 authorizations, earth station licenses, cable
television relay service station licenses, and are licensees on nine cable landing licenses.
9. Sprint has held an ownership interest in Clearwire since 2008. That ownership interest
has fluctuated, but currently is approximately 50.45 percent.
11
3. Clearwire Corporation
10. Clearwire is a publicly traded corporation,
12
headquartered in Bellevue, Washington.
13
Although Sprint currently holds a voting interest of just over 50 percent of Clearwire, its governance is
controlled by an Equityholders’ Agreement, which sets forth the terms, conditions, rights and obligations
of its various strategic investors.
14
11. Clearwire provides wholesale and retail advanced mobile broadband services, and its
network covers over 135.4 million people in approximately 71 markets. As of December 31, 2012, its
systems served approximately 1.4 million retail subscribers and 8.2 million wholesale subscribers.
Clearwire owns Broadcast Radio Service (“BRS”) licenses and leases excess capacity from other BRS
and Educational Broadband Service (“EBS”) licensees. Clearwire does not hold any common carrier
licenses nor does it provide any common carrier services.
B. Description of the Transactions
1. SoftBank Acquisition of Sprint Nextel
12. Sprint and SoftBank originally entered into agreements through which SoftBank would
have paid approximately $12.1 billion to purchase shares from existing Sprint shareholders and would
have invested an additional $8 billion directly in Sprint.
15
In so doing, SoftBank would have acquired
9
Sprint’s subsidiaries include Sprint Communications Company, L.P., Virgin Mobile, L.P., and Sprint Spectrum,
L.P. See Public Interest Statement at 3, n.3. Sprint recently acquired Personal Communications Service (“PCS”)
spectrum licenses and customers from U.S. Cellular in certain markets. See Wireless Telecommunications Bureau
Grants Consent to the Assignment of Portions or all of Three Personal Communications Service Licenses Covering
Parts of Illinois, Indiana, Michigan, Missouri, and Ohio from United States Cellular Corporation to Sprint Nextel
Corporation, Public Notice, DA 13-522, 28 FCC Rcd 3077 (WTB 2013).
10
See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 Annual Report and
Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile
Services, WT Docket No. 11-186, Sixteenth Annual Mobile Wireless Competition Report, 28 FCC Rcd 3700, 3754,
¶ 53 (rel. Mar. 21, 2012) (“Sixteenth Annual Competition Report”).
11
Applications of Sprint Nextel Corporation, Transferor, and SoftBank Corp., and Starburst II, Inc., Transferees, for
Consent to Transfer of Control of Licenses and Authorizations, IB Docket No. 12-343, Amendment at 2-3, dated
Dec. 20, 2012 (“Amendment”).
12
Letter from Angela Y. Kung, Mintz Levin, counsel for Clearwire Corporation, to Marlene H. Dortch, Secretary,
FCC, dated Apr. 4, 2013 (“Clearwire Apr. 4, 2013 Ex Parte”).
13
Public Interest Statement at 4.
14
Clearwire Apr. 4, 2013 Ex Parte at 1.
15
Public Interest Statement at 1.
Federal Communications Commission FCC 13-92
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approximately a 70 percent indirect interest in Sprint, with the remaining interest held by existing Sprint
shareholders.
16
On June 10, 2013, however, SoftBank and Sprint modified their merger agreement to
change certain terms related to the purchase of Sprint shares.
17
The payment for Sprint shares has
increased from approximately $12.1 billion to $16.64 billion, and SoftBank will acquire approximately a
78 percent ownership in Sprint upon closing.
18
SoftBank’s direct investment in Sprint will be reduced to
$5 billion.
19
The total value of the transaction will increase from approximately $20.1 billion to $21.6
billion.
20
On June 25, 2013, the Sprint shareholders approved the SoftBank offer.
21
13. Under the agreements, SoftBank has established a U.S. holding company, Starburst I and
two additional U.S. subsidiaries, Starburst II, which is wholly owned by Starburst I, and Starburst III, Inc.
(“Merger Sub”), which is wholly owned by Starburst II.
22
As part of the proposed transaction, Sprint will
merge with Merger Sub, with Sprint being the surviving entity.
23
After consummation of the transaction,
Starburst II will wholly own and control Sprint. SoftBank, through Starburst I, will own approximately
78 percent of the shares of Starburst II,
24
and the existing shareholders of Sprint will own the remaining
shares of Starburst II.
25
Sprint and its subsidiaries will continue to hold all of the Commission
authorizations they currently hold.
26
The Applicants state that, by virtue of SoftBank’s acquisition of an
approximately 78 percent indirect interest in Sprint, SoftBank also will indirectly acquire Sprint’s interest
in Clearwire.
27
14. The Applicants assert that the proposed transaction will benefit consumers by promoting
greater wireless competition and broadband innovation and deployment. They note that the money that
SoftBank will invest in Sprint will allow it to strengthen its balance sheet and invest in its network and its
broadband wireless service.
28
The Applicants also assert that Sprint’s proposed acquisition of complete
ownership of Clearwire (described below), while not a prerequisite to SoftBank’s acquisition of Sprint,
will increase the public interest benefits associated with the SoftBank acquisition by providing the
financial resources needed to transition Clearwire’s network to Long Term Evolution (“LTE”) technology
16
Id. at 6-7.
17
Applicants June 11, 2013 Ex Parte. See Sprint Nextel Corporation Schedule 14A, at
http://www.sec.gov/Archives/edgar/data/101830/000119312513254881/d552426ddefa14a.htm.
18
Applicants June 11, 2013 Ex Parte at 1.
19
Id. at 1 n.1.
20
Id. at 2.
21
See Sprint Shareholders Overwhelmingly Approve Merger Agreement with SoftBank, Sprint News Release, dated
June 25, 2013, available at http://newsroom.sprint.com/news-releases/sprint-shareholders-overwhelmingly-approve-
merger-agreement-with-softbank.htm.
22
Applicants June 11, 2013 Ex Parte at 7.
23
Id.
24
SoftBank will have the right to designate six of Starburst II’s 10 directors. The remaining directors will consist of
the CEO and three other current directors of Sprint. Id. at n.11.
25
Applicants June 11, 2013 Ex Parte at 1.
26
Public Interest Statement, Attachment 1 (illustrating the structure of the proposed transaction).
27
Public Interest Statement at 9.
28
SoftBank has already invested $3.1 billion in the form of newly issued convertible bonds. Public Interest
Statement at 8.
Federal Communications Commission FCC 13-92
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and improve wireless broadband service to Clearwire and Sprint customers and enable Sprint to use
Clearwire’s 2.5 GHz spectrum more effectively.
29
The Applicants also contend that, because SoftBank
and Sprint are not competitors, and SoftBank has no attributable interests in any other domestic wireless
carriers, its acquisition of a controlling interest in Sprint will not have adverse competitive effects or other
public interest harms.
30
2. Sprint Nextel Acquisition of Clearwire
15. After the applications for the SoftBank acquisition of Sprint were filed, Sprint proposed
to acquire the remaining shares of Clearwire that Sprint does not already own for $2.97 per share, an
aggregate purchase price of approximately $2.2 billion,
31
on the condition that the Commission approve
SoftBank’s applications to acquire control of Sprint.
32
On December 20, 2012, Applicants filed an
amendment to their applications seeking approval of this transaction.
33
On January 8, 2013, DISH
Network Corporation (“DISH”) stated that it had approached Clearwire with an offer to purchase all of
the Clearwire shares at $3.30 per share.
34
In response to the offer from DISH, on May 21, 2013, Sprint
increased its offer for the remaining shares of Clearwire to $3.40 per share.
35
DISH then issued a tender
offer for Clearwire shares on May 29, 2013,
36
which the Clearwire Board endorsed, at a price of $4.40
per share.
37
On June 20, 2013, Sprint increased its offer for the remaining Clearwire shares it does not
own to $5.00 per share, and the Clearwire Board changed its recommendation to endorse the Sprint
proposal.
38
On June 26, 2013, DISH withdrew its tender offer for Clearwire shares.
39
The Clearwire
shareholders are currently scheduled to vote on the final Sprint offer on July 8, 2013.
40
29
Amendment at 4-6.
30
Public Interest Statement at 13-30.
31
Amendment at 3. See also Sprint to Acquire 100 Percent Ownership of Clearwire for $2.97 per Share, Sprint
News Release, dated Dec. 17, 2012, available at http://newsroom.sprint.com/news-releases/sprint-to-acquire-100-
percent-ownership-of-clearwire-for-297-per-share.htm.
32
Amendment at 1-4.
33
Id. at 1.
34
DISH Statement Regarding Clearwire, DISH News Release, dated January 8, 2013, available at
http://dish.client.shareholder.com/releasedetail.cfm?ReleaseID=732322.
35
See Sprint Submits Increased Offer for Clearwire, Sprint News Release, dated May 21, 2013, available at
http://newsroom.sprint.com/news-releases/sprint-submits-increased-offer-for-clearwire.htm.
36
See DISH Network Announces Tender Offer in Letter to Clearwire Board of Directors, DISH news release, dated
May 29, 2013, available at http://dish.client.shareholder.com/releasedetail.cfm?ReleaseID=767990. See also DISH
Network Corporation Offer to Purchase at
http://www.sec.gov/Archives/edgar/data/1001082/000104746913006617/a2215502zex-99_a1i.htm.
37
Clearwire Special Committee and Board of Directors Unanimously Recommend Stockholders Tender Into DISH
Network $4.40 Per Share Tender Offer, Clearwire news release, dated June 12, 2013, available at
http://corporate.clearwire.com/releases.cfm.
38
Letter from Regina M. Keeney, counsel for Sprint, Howard J. Symons, counsel for Clearwire, and John R. Feore,
counsel for SoftBank, Starburst I, and Starburst II, to Marlene H. Dortch, Secretary, FCC, dated June 20, 2013, at 1
(“Sprint/Clearwire/SoftBank June 20, 2013 Ex Parte”).
39
DISH Network Announces Withdrawal of Clearwire Tender Offer, DISH News Release dated June 26, 2103,
available at http://dish.client.shareholder.com/releasedetail.cfm?ReleaseID=774018.
40
See Sprint/Clearwire/SoftBank June 20, 2013 Ex Parte at 1.
Federal Communications Commission FCC 13-92
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16. Under the agreement, Collie Acquisition Corp., a wholly owned subsidiary of Sprint, will
be merged into Clearwire, with Clearwire as the surviving corporation.
41
After consummation of the
merger, Sprint, which will be controlled by SoftBank, will have 100 percent stock ownership in and
control of Clearwire, and the Equityholders’ Agreement among Clearwire, Sprint and the other strategic
investors in Clearwire that currently determines the governance of Clearwire will be terminated.
42
17. The Applicants claim that the transaction will eliminate the inefficiencies created by the
current ownership and governance current structure of Clearwire and allow Clearwire’s customers to
benefit fully from not only Sprint’s resources and expertise, but also SoftBank’s resources and expertise.
43
The Applicants further claim that increasing Sprint’s approximately 50.45 percent interest in Clearwire to
100 percent will have no adverse competitive effects and that similarly, SoftBank’s indirect acquisition of
a controlling interest in Clearwire raises no competitive concerns.
44
C. Transaction Review Process
18. On November 16, 2012, the Applicants filed applications pursuant to sections 214 and
310(d) of the Act
45
and the Cable Landing License Act
46
seeking Commission consent to the transfer of
control of various wireless licenses and leases, domestic section 214 authority, international section 214
authorizations, earth station authorizations, interests in submarine cable licenses, and cable television
relay service station licenses held by Sprint and its subsidiaries, and by Clearwire to SoftBank and
Starburst II.
47
On November 30, 2012, the International Bureau released a public notice announcing that
the applications were accepted for filing and sought comment on the proposed transaction, establishing a
docket for the proposed transaction, IB Docket No. 12-343, and designating the ex parte status of the
Applications as permit-but-disclose under the Commission’s rules.
48
19. On December 20, 2012, the Applicants filed an Amendment to supplement their
previously filed applications to reflect Sprint’s proposed acquisition of control of Clearwire.
49
On
December 27, 2012, the International Bureau issued a public notice seeking comment on this Amendment
and revised the comment cycle in the proceeding.
50
Petitions to deny were due January 28, 2013,
41
Amendment at 3. For a description of the agreement, see generally Amendment; Agreement and Plan Of Merger
By and Among Sprint Nextel Corporation, Collie Acquisition Corp. and Clearwire Corporation, dated as of
December 17, 2012, attached as Exhibit 2.1 to Form 8-K of Sprint Nextel Corporation, Dec. 18, 2012, available at
http://www.sec.gov/Archives/edgar/data/101830/000119312512505717/d456262dex21.htm (“Merger Agreement”).
42
Id. at 4.
43
Id. at 5-6.
44
Id. at 6-7.
45
47 U.S.C. §§ 214, 310(d).
46
47 U.S.C. §§ 34-39.
47
Public Interest Statement.
48
Nov. 30, 2012 Public Notice.
49
See generally Amendment.
50
Dec. 27, 2012 Public Notice. DISH alleges that the June 10, 2013 amendment to the merger agreement between
Softbank and Sprint (described in paragraph 12 supra) requires a revised public notice period as a major amendment
to the pending applications. Letter from Pantelis Michalopoulos, counsel for DISH, to Marlene H. Dortch,
Secretary, FCC, dated June 12, 2013 (“DISH June 12, 2013 Ex Parte”). DISH cites section 1.927(h) of the
Commission’s rules, which requires a new public notice period for major amendments. See id. at 1; 47 C.F.R. §
1.927(h). The Applicants contest DISH’s argument, asserting that the revised merger agreement does not constitute
(continued….)
Federal Communications Commission FCC 13-92
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oppositions due February 12, 2013, and replies due February 25, 2013. In response to the public notice,
the Commission received several petitions to deny, comments, oppositions, and reply comments.
51
20. Standing. The Applicants argue that the Consortium for Public Education and the Roman
Catholic Diocese of Erie, Pennsylvania (“EBS Petitioners”), Crest Financial Limited (“Crest”), Taran
Asset Management (“Taran”), Crow Creek Sioux Tribe Authority (“Crow Creek Sioux”), the
Communications Workers of America (“CWA”), and the CLEC Petitioners all fail to demonstrate
standing to be a party to this proceeding. In particular, the Applicants contend that these parties did not
show they would suffer a “direct injury” that is “distinct and palpable”; that this injury is “fairly
traceable” to the Commission’s grant of the challenged application; and “that it is likely, as opposed to
merely speculative, that the alleged injury would be prevented or redressed” if the application were
denied.
52
EBS Licensee Hispanic Information and Telecommunications Network, Inc. (“HITN”) states
that the two EBS Petitioners do not have standing because they have no connection to the markets they
examine and are not affected by the showings for which they seek review.
53
The two EBS Petitioners and
Crest both dispute the Applicants’ contentions regarding standing.
54
The Applicants also argue that an ex
parte letter filed by the Minority Media and Telecommunications Council (“MMTC”)
55
is untimely and
the Commission should not consider the issues raised by MMTC.
56
Given the nature of the concerns
these entities raise, we do not consider it necessary to resolve the issue of their standing or the timeliness
of the MMTC letter; rather, we will address their arguments as part of our review of the transaction.
(Continued from previous page)
a major amendment. Letter from Regina M. Keeney, counsel for Sprint, John R. Feore, counsel for SoftBank, to
Marlene H. Dortch, Secretary, FCC, dated June 13, 2013 at 1 (“Applicants June 13, 2013 Ex Parte”). We reject
DISH’s claim that the revised merger agreement constitutes a major amendment under the Commission’s rules that
warrants a new public notice comment period. As section 1.927(h) notes, major amendments are defined in section
1.929. Nowhere in that section is an amendment to a merger agreement like that now before us included in its
provisions. Section 1.929(k) provides that any change not specifically listed in the preceding sections of 1.929 are
considered to be minor amendments, which are not subject to an additional public notice comment period.
51
A list of the filings in this proceeding is contained in Appendix A. On March 26, 2013, Line Systems, Inc.
(“LSI”) filed a request to withdraw its petition, and on April 16, 2013, amended its request. See Letters from James
C. Falvey, Eckert Seamans, counsel for LSI, to Marlene Dortch, Secretary, FCC, dated Mar. 26. 2013 and Apr. 16,
2013 (“LSI Mar. 26, 2013 Ex Parte” and “LSI Apr. 16, 2013 Ex Parte”). Pursuant to section 1.935 of the
Commission’s rules, LSI submitted a declaration from an officer of LSI certifying that LSI did not receive any
consideration for its withdrawal of its Petition. 47 C.F.R. § 1.935. In the Affidavit, Mr. Kevin McGeary, LSI Vice
President, explains that Sprint Nextel and LSI reached an agreement to settle an access charge dispute pending in
federal court, that LSI unilaterally decided to withdraw its petition, and that the agreement includes no discussion or
consideration for LSI’s withdrawal of its petition filed in this transaction. LSI Apr. 16, 2013 Ex Parte, McGeary
Affidavit. Based on our review of LSI’s petition, its withdrawal request, and the related declaration under section
1.935, we find that withdrawal of the LSI Petition will further the public interest, and we hereby approve the
withdrawal.
52
Sprint Nextel Corporation, SOFTBANK CORP., Starburst I, Inc., Starburst II, Inc., Joint Opposition to Petitions
to Deny and Reply to Comments at 55-58, dated Feb. 12, 2013 (“Joint Opposition”).
53
HITN Opposition at 3.
54
EBS Petitioners Petition at 2, n.2; EBS Petitioners Reply at 1-2; Crest Reply at 29, n.95.
55
Letter from David Honig, President, Minority Media and Telecommunications Council, to Chairwoman Mignon
Clyburn, FCC, dated May 28, 2013 (“MMTC May 28, 2013 Ex Parte”).
56
Letter from Antoinette Cook Bush, counsel for Sprint Nextel Corporation, to Marlene H. Dortch, Secretary, FCC,
dated May 30, 2013 (“Sprint Nextel May 30, 2013 Ex Parte”).
Federal Communications Commission FCC 13-92
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21. Abeyance Request. DISH Network L.L.C. filed a request on January 16, 2013, to hold
these proceedings in abeyance, arguing that the applications are not ripe for consideration because
Sprint’s acquisition of control over Clearwire is subject to, among other things, a competing offer made
by DISH and a vote of the non-Sprint shareholders on whether to accept Sprint’s offer in light of DISH’s
offer.
57
The Applicants, as well as Crest, opposed the request.
58
On April 17, 2013, DISH again asked
the Commission to hold this proceeding in abeyance, this time because of the pendency of DISH’s
proposal to merge with Sprint.
59
The Applicants again opposed the request, arguing, among other points,
that the Commission’s approval of the SoftBank/Sprint applications would not prevent DISH’s ability to
make competing offers for Sprint.
60
22. On June 21, 2013, DISH filed with the SEC stating that it has “decided to abandon its
efforts to acquire Sprint Nextel Corporation.”
61
Further, on June 26, 2013, DISH announced that it has
withdrawn its tender offer for Clearwire shares.
62
Accordingly, we find the DISH requests are moot.
III. STANDARD OF REVIEW
23. Pursuant to sections 214(a) and 310(d) of the Act,
63
and the Cable Landing License Act,
64
we must determine whether the Applicants have demonstrated that the proposed transfer of control of
licenses, authorizations, and spectrum leasing arrangements will serve the public interest, convenience,
and necessity. In making this determination, we first assess whether the proposed transaction complies
with the specific provisions of the Act,
65
other applicable statutes, and the Commission’s rules.
66
If the
57
DISH Network, L.L.C., Request to Hold Proceeding in Abeyance, dated Jan. 16, 2013 (“DISH Request to Hold
Proceeding in Abeyance”).
58
Applicants Opposition to Petition for Abeyance, dated Jan. 23, 2013; Crest Opposition to Hold Proceeding in
Abeyance, dated Jan. 25, 2013.
59
DISH Supplement to Request to Hold Proceeding in Abeyance, dated Apr. 17, 2013.
60
Applicants Opposition to Supplement to Request to Hold Proceeding in Abeyance, dated Apr. 19, 2013.
61
See DISH Network Corporation Form 8-K, dated June 21, 2013.
62
DISH Network Announces Withdrawal of Clearwire Tender Offer, DISH News Release, dated June 26, 2103,
available at http://dish.client.shareholder.com/releasedetail.cfm?ReleaseID=774018.
63
47 U.S.C. §§ 214(a), 310(d).
64
47 U.S.C. §§ 34-39. The Cable Landing License Act provides that approval of a license application may be
granted “upon such terms as shall be necessary to assure just and reasonable rates and service.” 47 U.S.C. § 35.
The Commission does not conduct a separate public interest analysis under this statute. See, e.g., SBC
Communications, Inc. and AT&T Corp. Applications for Approval of Transfer of Control, WC Docket No. 05-65,
Memorandum Opinion and Order, 20 FCC Rcd 18290, 18300, ¶ 16, n.59 (2005) (“SBC-AT&T Order”); Verizon
Communications Inc. and MCI, Inc. Applications for Approval of Transfer of Control, WC Docket No. 05-75,
Memorandum Opinion and Order, 20 FCC Rcd 18433, 18442, ¶ 16, n.58 (2005) (“Verizon-MCI Order”).
65
Section 310(d) requires that we consider the application as if the proposed assignee were applying for the licenses
directly under section 308 of the Act, 47 U.S.C. § 308. See, e.g., Applications of Cellco Partnership d/b/a Verizon
Wireless and SpectrumCo LLC and Cox TMI, LLC For Consent To Assign AWS-1 Licenses, WT Docket No. 12-4,
Memorandum Opinion and Order and Declaratory Ruling, 27 FCC Rcd 10698, 10710, ¶ 28 (2012) (“Verizon
Wireless-SpectrumCo Order”).
66
See, e.g., Applications of AT&T Mobility Spectrum LLC, New Cingular Wireless PCS, LLC, Comcast
Corporation, Horizon Wi-Com, LLC, NextWave Wireless, Inc., and San Diego Gas & Electric Company For
Consent to Assign and Transfer Licenses, WT Docket No. 12-240, Memorandum Opinion and Order, 27 FCC Rcd
16459, 16463-64, ¶ 10 (2012) (“AT&T-WCS Order”); Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10710, ¶
(continued….)
Federal Communications Commission FCC 13-92
10
transaction does not violate a statute or rule, we next consider whether the transaction could result in
public interest harms by substantially frustrating or impairing the objectives or implementation of the Act
or related statutes.
67
We then employ a balancing test weighing any potential public interest harms of the
proposed transaction against any potential public interest benefits.
68
The Applicants bear the burden of
proving, by a preponderance of the evidence, that the proposed transaction, on balance, will serve the
public interest.
69
24. Our public interest evaluation necessarily encompasses the “broad aims of the
Communications Act,” which include, among other things, a deeply rooted preference for preserving and
enhancing competition in relevant markets, accelerating private sector deployment of advanced services,
promoting a diversity of license holdings, and generally managing the spectrum in the public interest.
70
Our public interest analysis also entails assessing whether the proposed transaction will affect the quality
of communications services or result in the provision of new or additional services to consumers.
71
In
conducting this analysis, we may consider technological and market changes, and the nature, complexity,
and speed of change of, as well as trends within, the communications industry.
72
25. Our competitive analysis, which forms an important part of the public interest evaluation,
is informed by, but not limited to, traditional antitrust principles.
73
The Commission and the Department
of Justice (“DOJ”) each have independent authority to examine the competitive impacts of proposed
communications mergers and transactions involving transfers of Commission licenses, but the standards
(Continued from previous page)
28; Application of AT&T Inc. and Qualcomm Incorporated For Consent to Assign Licenses and Authorizations, WT
Docket No. 11-18, Order, 26 FCC Rcd 17589, 17598-99, ¶ 23 (2011) (“AT&T-Qualcomm Order”).
67
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16463-64, ¶ 10; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10710, ¶ 28; AT&T-Qualcomm Order, 26 FCC Rcd at 17598-99, ¶ 23.
68
Id.
69
Id.
70
See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17603, ¶ 32, n.96; AT&T Inc. and Cellco Partnership d/b/a
Verizon Wireless Seek FCC Consent To Assign or Transfer Control of Licenses and Authorizations and Modify a
Spectrum Leasing Arrangement,WT Docket No. 09-104, Memorandum Opinion and Order, 25 FCC Rcd 8704,
8716, ¶ 22 (2010) (“AT&T-Verizon Wireless Order”); Applications of AT&T Inc. and Centennial Communications
Corp. For Consent to Transfer Control of Licenses, Authorizations, and Spectrum Leasing Arrangements, WT
Docket No. 08-246, Memorandum Opinion and Order, 24 FCC Rcd 13915, 13928, ¶ 28 (2009) (“AT&T-Centennial
Order”); Applications of Cellco Partnership d/b/a Verizon Wireless and Atlantis Holdings LLC For Consent to
Transfer Control of Licenses, Authorizations, and Spectrum Manager and De Facto Transfer Leasing Arrangements
and Petition For Declaratory Ruling that the Transaction is Consistent with Section 310(b)(4) of the
Communications Act, WT Docket No. 08-95, Memorandum Opinion and Order and Declaratory Ruling, 23 FCC
Rcd 17444, 17461, ¶ 27 (2008) (“Verizon Wireless-ALLTEL Order”); Sprint Nextel Corporation and Clearwire
Corporation Applications for Consent to Transfer Control of Licenses, Leases, and Authorizations, WT Docket No.
08-94, Memorandum Opinion and Order, 23 FCC Rcd 17570, 17580, ¶ 20 (2008) (“Sprint Nextel-Clearwire
Order”).
71
See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10752, ¶ 143; AT&T-Centennial Order, 24 FCC
Rcd at 13928, ¶ 28.
72
See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599, ¶ 24; AT&T-Centennial Order, 24 FCC Rcd at 13928, ¶
28.
73
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16464-65, ¶ 12; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10710, ¶ 29.
Federal Communications Commission FCC 13-92
11
governing the Commission’s competitive review differ somewhat from those applied by the DOJ.
74
Like
the DOJ, the Commission considers how a transaction will affect competition by defining a relevant
market, looking at the market power of incumbent competitors, and analyzing barriers to entry, potential
competition and the efficiencies, if any, that may result from the transaction.
75
The DOJ, however,
reviews telecommunications mergers pursuant to section 7 of the Clayton Act, and if it sues to enjoin a
merger, it must demonstrate to a court that the merger may substantially lessen competition or tend to
create a monopoly.
76
The DOJ review is also limited solely to an examination of the competitive effects
of the acquisition, without reference to diversity, localism, or other public interest considerations.
77
The
Commission’s competitive analysis under the public interest standard is somewhat broader, for example,
considering whether a transaction will enhance, rather than merely preserve, existing competition, and
takes a more extensive view of potential and future competition and its impact on the relevant market.
78
If the Commission is unable to find that the proposed transaction serves the public interest for any reason
or if the record presents a substantial and material question of fact, we must designate the application(s)
for hearing.
79
Finally, the Commission’s public interest authority enables us, where appropriate, to
impose and enforce narrowly tailored, transaction-specific conditions that ensure that the public interest is
served by the transaction.
80
IV. QUALIFICATIONS OF APPLICANTS
26. Among the factors the Commission considers in its public interest review is whether the
applicant for a license has the requisite “citizenship, character, financial, technical, and other
qualifications.”
81
Therefore, we must determine whether the transferors to the proposed transactions meet
the requisite qualifications requirements to hold and transfer licenses under section 310(d) and the
74
See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599-600, ¶ 25; AT&T-Verizon Wireless Order, 25 FCC Rcd
at 8717, ¶ 24.
75
See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929, ¶ 29; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17462, ¶ 28.
76
15 U.S.C. § 18.
77
See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13929, ¶ 29; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17462, ¶ 28.
78
See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17599, ¶ 25; AT&T-Verizon Wireless Order, 25 FCC Rcd at
8717, ¶ 24.
79
47 U.S.C. § 309(e); see also News Corp. and DIRECTV Group, Inc., Transferors, and Liberty Media Corp.,
Transferee, for Authority to Transfer Control, MB Docket No. 07-18, Memorandum Opinion and Order, 23 FCC
Rcd 3265, 3277, ¶ 22 (2008); EchoStar Communications Corp., General Motors Corp. and Hughes Electronics
Corp., and EchoStar Communications Corp., Hearing Designation Order, 17 FCC Rcd 20559, 20574, ¶ 25 (2002).
80
47 U.S.C. §§ 214(c) (authorizing the Commission to impose “such terms and conditions in its judgment the public
convenience and necessity may require”), 303(r) (authorizing the Commission to prescribe restrictions or conditions
not inconsistent with law that may be necessary to carry out the provisions of the Communications Act); see, e.g.,
Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10711, ¶ 30; AT&T-Qualcomm Order, 26 FCC Rcd at 17600,
¶ 26; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8717-18, ¶ 25.
81
47 U.S.C. §§ 308, 310(d); see also, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10712, ¶ 33; AT&T-
Qualcomm Order, 26 FCC Rcd at 17600, ¶ 27.
Federal Communications Commission FCC 13-92
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Commission’s rules.
82
Section 310(d) also obligates the Commission to consider whether the proposed
transferee is qualified to hold Commission licenses.
83
27. Discussion. The Commission generally does not reevaluate the qualifications of
transferors unless issues related to basic qualifications have been sufficiently raised in petitions to warrant
designation for hearing.
84
As noted above, the Commission also considers the qualifications of the
proposed transferee. In this case, several parties have raised concerns regarding the qualifications of
SoftBank and Sprint, in addition to certain foreign ownership considerations that we address in Section
VII below.
85
As we discuss below, we find that the concerns do not warrant a finding that SoftBank is
not qualified to indirectly hold the licenses and authorizations held by Sprint and Clearwire because those
claims are either speculative or otherwise adequately addressed. We also find no basis to question the
qualifications of Sprint and Clearwire.
28. Crest argues that both SoftBank and Sprint face serious financial risks from their current
level of debt and that this will be exacerbated if the transactions are consummated.
86
Crest asserts that
SoftBank faces serious debt concerns that will become more acute after SoftBank takes on Sprint’s debt.
87
According to Crest, this creates a risk that Sprint will be “forced not to develop products and services that
create lasting value to consumers, but rather only to develop products and services that will result in the
greatest immediate cash flow.”
88
In addition, Crest contends that the Commission must consider the
financial qualifications of the Applicants and that it considers debt levels when necessary, as it did in its
review of the NextWave transaction.
89
Crest also maintains that the Commission has repeatedly provided
for an exception to its practice of refraining from weighing in on questions of financing when there are
specific allegations of fact that warrant such an inquiry under the Commission’s public interest mandate.
90
82
See 47 U.S.C. §§ 214(a), 310(d); 47 C.F.R. § 1.948; see also, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC
Rcd at 10712, ¶ 33; AT&T-Qualcomm Order, 26 FCC Rcd at 175600-01, ¶ 27.
83
See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10712, ¶ 33; AT&T-Qualcomm Order, 26 FCC
Rcd at 175601, ¶ 28; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8720, ¶ 29.
84
See, e.g., Applications for the Assignment of License from Denali PCS, L.L.C. to Alaska DigiTel, L.L.C. and the
Transfer of Control of Interests in Alaska DigiTel, L.L.C. to General Communication, Inc., WT Docket No. 06-114,
Memorandum Opinion and Order, 21 FCC Rcd 14863, 14872, ¶ 16 (2006); Applications of Guam Cellular and
Paging, Inc. and DoCoMo Guam Holdings, Inc., WT Docket No. 06-96, Memorandum Opinion and Order, 21 FCC
Rcd 13580, 13589-90, ¶ 14 (2006).
85
As explained in Section VII below, we find that the level of foreign ownership in Sprint and its Licensee
Subsidiaries that would result from the transactions would not pose a risk to competition; nor would it serve the
public interest to prohibit this level of indirect foreign ownership under section 310(b)(4) of the Act.
86
See Crest Reply at 20-22.
87
Crest Petition to Deny at 26, 35-36; Crest Reply at 20-24.
88
Crest Petition to Deny at 26.
89
Crest Reply at 23 (citing 47 U.S.C. §§ 308(b), 309(j)(17)(A)(ii) and Applications of NextWave Personal
Communications, Inc. for Various C-Block Broadband PCS Licenses, Memorandum Opinion and Order, 12 FCC
Rcd 2030 (WTB 1997)).
90
Crest Reply at 23-24 (citing Applications of Shareholders of GAF Corp., Memorandum Opinion and Order, 7
FCC Rcd 3225 (1992) and Motient Corp. & Subsidiaries, Transferors, & SkyTerra Communications, Transferee,
Memorandum Opinion and Order and Declaratory Ruling, 21 FCC Rcd 10198, 10209 (Int’l Bur., WTB, and OET
2006)).
Federal Communications Commission FCC 13-92
13
29. The Applicants respond that Sprint will be in a stronger financial position as a result of
the transaction with SoftBank and that SoftBank is a strong, financially sound company that can
accommodate the additional debt it will incur to finance its investment in Sprint.
91
Further, the
Applicants claim that SoftBank has a strong record of rapidly repaying debt.
92
They also assert that as a
policy matter, the Commission generally does not become “enmeshed” in evaluating the amount of debt
financing that is appropriate in a corporate acquisition.
93
30. Crest also alleges that the Applicants have “jumped the gun” and have been acting as if
SoftBank already owns Sprint even through the transaction was still pending with the Commission.
94
Crest cites press reports that Mr. Masayoshi Son, the CEO of SoftBank, has been making public
statements regarding the post-transaction Sprint and the composition of its board of directors, meeting
with Sprint representatives to plan “the synergies” of the merged company, and that SoftBank has been
involved with Sprint’s offer to acquire Clearwire.
95
The Applicants respond that none of these activities
demonstrates that Sprint has ceded control to SoftBank but rather are appropriate activities to allow the
Applicants to prepare for post-closing activities to optimize the transaction once it is consummated.
96
Further they note that the SoftBank approval rights regarding Sprint’s offer for Clearwire are similar to
protective covenants to block major transactions during a transaction that the Commission has previously
found not to constitute an unauthorized transfer of control.
97
31. DISH also raises concerns regarding SoftBank’s reported association with UTStarcom,
Inc. (“UTStarcom”). DISH cites a press report that DOJ had investigated UTStarcom for illegal bribes to
employees of Chinese government-controlled telecommunications companies.
98
DISH notes that
UTStarcom had entered into a non-prosecution agreement with DOJ and a consent decree with the
Securities Exchange Commission (“SEC”) regarding conduct encompassing bribery and failure to
properly account for a payment in its financial records.
99
DISH further contends that there was a close
relationship between SoftBank and UTStarcom.
100
SoftBank responds the UTStarcom settlements with
DOJ and SEC do not involve either SoftBank or Mr. Son and are not relevant to this proceeding.
101
91
Joint Opposition at 11-12.
92
Id. at 13.
93
Id. at 14 (quoting Applications of MMM Holdings, Inc. for Transfer of Control of LIN Broadcasting Corporation,
Memorandum Opinion and Order, 4 FCC Rcd 6838, 6842, ¶ 26 (Comm. Car. Bur. and Mass Media Bur.), aff’d, 4
FCC Rcd 8243 (1989)).
94
Letter from Viet D. Dinh, counsel for Crest Financial Limited, to Marlene H. Dortch, Secretary, FCC, dated May
28, 2013.
95
Id. at 3-4.
96
Letter from Regina M. Keeney, counsel for Sprint Nextel Corporation, and John R. Feore, counsel for SoftBank
Corp., to Marlene H. Dortch, Secretary, FCC, dated June 6, 2013.
97
Id. at 2, n.7.
98
Letter from Pantelis Michalopoulos, counsel for DISH Network Corporation, to Marlene H. Dortch, Secretary,
FCC, dated Apr. 29, 2013.
99
Id. A copy of the non-prosecution agreement with DOJ and the consent with the SEC are attached as Exhibits to
the letter.
100
Id. at 3.
101
Letter from John R. Feore, counsel for SoftBank Corp., to Marlene H. Dortch, Secretary, FCC, dated May 1,
2013 (“SoftBank May 1, 2013 Ex Parte”).
Federal Communications Commission FCC 13-92
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SoftBank asserts that the Commission has consistently held that non-adjudicated claims of non-FCC
misconduct, such as those involving UTStarcom, are not relevant to transfer of control proceedings.
102
DISH replies that the Commission will consider nolo contendere pleas and non-FCC misconduct related
to dishonesty and fraudulent conduct when assessing character qualifications.
103
32. MediaFreedom.org and DISH filed letters citing press reports that SoftBank may have
threatened banks in order to dissuade them from funding DISH’s offer for Sprint. According to the cited
press reports, SoftBank allegedly would hurt these banks’ chances to participate in an initial public
offering (“IPO”) for a Chinese company in which SoftBank holds an ownership interest.
104
SoftBank
responds that SoftBank is not in the position to affect the IPO of the company in question and even if it
were, the claims raised by MediaFreedom.org and DISH are not relevant to this proceeding.
105
33. Upon review of the record, we find that the allegations questioning the qualifications of
the Applicants are speculative and do not provide a basis to find that either SoftBank or Sprint are not
qualified. There is no evidence in the record that the level of debt that either SoftBank or Sprint would
incur as a result of these transactions would likely result in any public interest harms. Nor is there
evidence in the record that SoftBank has been exercising control over Sprint during the pendency of these
applications. Additionally, we do not find that the alleged connection between SoftBank and the
UTStarcom bribery issue is relevant to this proceeding. The Commission has previously found that
consent decrees, such as the non-prosecution agreement and consent decree that UTStarcom entered into
with DOJ and the SEC, will not be considered as adjudicated misconduct for the purposes of assessing an
applicant’s character.
106
Further, these agreements only involve UTStarcom and do not even mention
SoftBank or Mr. Son. DISH merely speculates as to any relationship SoftBank or Mr. Son may have had
with UTStarcom on the actions in question. As to any activities by SoftBank regarding DISH’s dealing
with banks to secure credit for DISH’s offer for Sprint, we find these allegations to be speculative as they
are based on press reports of actions that SoftBank “may have taken,”
107
and DISH has not provided any
other evidence. Further, as we discuss below, we do not find the indirect foreign ownership of the post-
transaction Sprint raises any public interest concerns.
108
Therefore we find nothing in the record that
would undermine the basic qualifications of Sprint or SoftBank.
102
Id. at 2 (citing Policy Regarding Character Qualifications in Broadcasting Licensing, GN Docket No. 81-500,
Report, Order and Policy Statement, 102 FCC 2d 1179, 1205 (1986) (“Character Policy Statement”)).
103
Letter from Pantelis Michalopoulos, counsel for DISH Network Corporation, to Marlene H. Dortch, Secretary,
FCC, dated May 6, 2013.
104
Letter from Mike Wendy, President, MediaFreedom.org, to Marlene H. Dortch, Secretary, FCC, dated May 19,
2013; Letter from Pantelis Michalopoulos, counsel for DISH Network Corporation, to Marlene H. Dortch, Secretary,
FCC, dated May 16, 2013 (“DISH May 16, 2013 Ex Parte”).
105
Letter from John R. Feore, counsel for SoftBank Corp., to Marlene H. Dortch, Secretary, FCC, dated May 23,
2013 (“SoftBank May 23, 2013 Ex Parte”).
106
Character Policy Statement, 102 FCC 2d at 1205.
107
We note that despite these allegations, DISH appears to have secured financing for its offer for Sprint. See, e.g.,
Chicago Tribune, Dish lines up banks to finance Sprint bid: sources, dated May 15, 2013, at
http://articles.chicagotribune.com/2013-05-15/business/sns-rt-us-sprint-deal-financingbre94e175-
20130515_1_sprint-bid-dish-offer-charlie-ergen.
108
See Section VII infra.
Federal Communications Commission FCC 13-92
15
V. POTENTIAL PUBLIC INTEREST HARMS
A. Overview
34. In our review of applications involving a proposed transaction, the Commission evaluates
the potential public interest harms, including potential competitive harms, that may result from the
transaction.
109
Transactions raise potential competitive concerns when the post-transaction entity has the
incentive and the ability, either by itself or in coordination with other service providers, to raise prices,
lower quality, or otherwise harm competition in a relevant market.
110
The Commission’s competitive
analysis of wireless transactions focuses initially on markets where the acquisition of customers and/or
spectrum would result in additional concentration of either or both, and thereby potentially lead to
competitive harm. The Commission has used a two-part initial screen to help identify local markets
where changes in market concentration or spectrum holdings from the transaction may be of particular
concern.
111
As discussed below, the initial screen’s comparison of subscriber shares and spectrum
holdings before and after the proposed transactions would identify no changes in any markets. Regarding
Sprint’s acquisition of Clearwire, Clearwire’s spectrum and customers already are attributed to Sprint
under the attribution policies the Commission uses in applying the initial screen. Regarding SoftBank’s
acquisition of both Sprint and Clearwire, SoftBank has no customers or spectrum in the United States.
35. As set out in previous recent transactions orders, however, the Commission has not
limited its analysis of potential competitive harms to solely those markets identified by the initial screen,
when encountering other factors that may bear on the public interest inquiry.
112
Here, given the breadth
of assertions regarding potential competitive harm resulting from holdings of 2.5 GHz spectrum, we
examine, in particular, Sprint’s acquisition of de facto control of Clearwire. We find, as detailed below,
that the transactions before us are not likely to result in any competitive or other public interest harms in
the provision of mobile wireless services.
109
See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10716, ¶¶ 47-48, 10734, ¶ 95; AT&T-Qualcomm
Order, 26 FCC Rcd at 17622-23, ¶ 81; AT&T-Verizon Wireless Order, 25 FCC Rcd at 8716-18, ¶¶ 22-25, 8720-21,
¶¶ 30-33.
110
See, e.g., AT&T-Centennial Order, 24 FCC Rcd at 13931-32, 13939-42, 13948, ¶¶ 34, 54, 56-57, 59, 61, 75;
Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17468-69, 17484-85, 17487-88, ¶¶ 40-43, 82-83, 91-92.
111
First, when a proposed transaction would change horizontal market concentration in any local market, the screen
identifies markets where competitive harm may be more likely through assessing such changes in market
concentration, as measured by the Herfindahl-Hirschman Index (“HHI”). See, e.g., AT&T-Verizon Wireless Order,
25 FCC Rcd at 8724-25, ¶ 42. Second, when a proposed transaction would increase the spectrum holdings in any
local market post-transaction, the Commission undertakes a review of the competitive effects of the increase in
spectrum holdings in those markets. See, e.g., Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10716, ¶ 48;
AT&T-Qualcomm Order, 26 FCC Rcd at 17602, ¶ 31; AT&T-Centennial Order, 24 FCC Rcd at 13938, ¶ 50.
112
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16467, ¶ 21 (recognizing the proposition that the “Commission is
not . . . limited in its consideration of potential competitive harms solely to markets identified by its initial screen”
and, in addition to considering 10 local markets identified by the screen, analyzing the national market because the
proposed acquisition would be in a substantial majority of local markets across the country); Verizon Wireless-
SpectrumCo Order, 27 FCC Rcd at 10716, ¶ 48; AT&T-Qualcomm Order, 26 FCC Rcd at 17609-10, ¶¶ 49-50
(recognizing that up to three markets could be triggered by the screen, but considering more broadly AT&T’s post-
transaction holdings under 1 GHz because, inter alia, of the record in that proceeding and the substantial holdings
that the company would then have under 1 GHz).
Federal Communications Commission FCC 13-92
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B. Market Definitions
36. We begin our competitive analysis by determining the appropriate market definitions for
these transactions, including a determination of the product market and geographic markets.
113
37. Product and Geographic Markets. We continue to use the product market definition that
the Commission has applied in recent transactions: a combined “mobile telephony/broadband services”
product market that is comprised of mobile voice and data services, including mobile voice and data
services provided over advanced broadband wireless networks (mobile broadband services).
114
We note
that no party in the proceeding challenged this mobile telephony/broadband services product market
definition.
38. With respect to geographic markets, the Commission has found that the relevant
geographic markets for wireless transactions generally are “local”
115
because most consumers use their
mobile telephony/broadband services where they live, work, and shop (or close to those places) and so
purchase their services from providers that offer and market services locally.
116
However, the
Commission also has evaluated a transaction’s competitive effects at the national level where a
transaction exhibits certain national characteristics that provide potential cause for concern.
117
For
purposes of evaluating the competitive effects of the proposed transactions, we use local markets as well
as national markets, given the national characteristics of the proposed transactions.
118
We note that no
party in the proceeding challenged the local or national geographic market definitions.
39. Input Market for Spectrum. When a proposed transaction would increase the
concentration of spectrum holdings in any local market, the Commission evaluates the post-transaction
spectrum holdings of the acquiring firm that are “suitable” and “available” in the near term for the
113
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468, ¶ 23; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718, ¶ 52; AT&T-Qualcomm Order, 26 FCC Rcd at 17602, ¶ 32.
114
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468, ¶ 24; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10717, ¶ 53; AT&T-Qualcomm Order, 26 FCC Rcd at 17602-03, ¶¶ 32-33; AT&T-Centennial Order, 24 FCC Rcd at
13932, ¶ 37.
115
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468, ¶ 25; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718, ¶ 54; AT&T-Qualcomm Order, 26 FCC Rcd at 17604, ¶ 34.
116
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16469, ¶ 26; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718, ¶ 56; AT&T-Centennial Order, 24 FCC Rcd at 13934, ¶ 41; see also Sixteenth Annual Competition Report,
28 FCC Rcd at 3735, ¶¶ 22-23.
117
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468, ¶ 25; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718, ¶ 54; AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05, ¶¶ 34-37. The Commission has recognized that
certain national characteristics, such as prices and service plan offerings, do not vary for most providers across most
geographic markets, and that the four nationwide providers, as well as some other providers, set the same rates for a
given plan everywhere and do not alter the plans they offer depending on location. See, e.g., AT&T-Qualcomm
Order, 26 FCC Rcd at 17604, ¶ 35.
118
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16468, ¶ 25; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10718, ¶ 54; AT&T-Qualcomm Order, 26 FCC Rcd at 17604-05, ¶¶ 34-37. Sprint is currently the third largest
nationwide service provider in the United States, with approximately 56 million customers, and a network that
covers over 290 million people, or approximately 94 percent of the population of the mainland United States. See
Public Interest Statement at 3; Sixteenth Annual Competition Report, 28 FCC Rcd at 3744, ¶ 43, Table 2. Clearwire
provides service in many metropolitan areas and its network currently covers approximately 105 million people, or
approximately 34 percent of the population of the mainland United States. See Sixteenth Annual Competition
Report, 28 FCC Rcd at 3744-45, ¶ 43, Table 3.
Federal Communications Commission FCC 13-92
17
provision of mobile telephony/broadband services.
119
The Commission has previously determined that
cellular, broadband PCS, Specialized Mobile Radio (“SMR”), and 700 MHz band spectrum, as well as
Advanced Wireless Services (“AWS-1”) and BRS spectrum
120
where available,
121
and most recently,
Wireless Communications Services (“WCS”) spectrum, all meet this definition, and they have therefore
been included in the initial spectrum screen.
122
40. Verizon Wireless and others assert that the Commission should include the remaining
amount of BRS spectrum and all or nearly all of EBS spectrum in the spectrum screen because they are
suitable and available for the provision of mobile telephony/broadband services.
123
In support of this
argument, Verizon Wireless, Taran, DISH, and the two EBS Petitioners argue that this additional BRS
and EBS spectrum already is in use, as Clearwire is broadly deploying BRS and EBS spectrum for
commercial mobile services.
124
Verizon Wireless points out that the Applicants have claimed that
Clearwire’s 2.5 GHz spectrum will enhance their spectrum portfolio thereby strengthening their
competitive position in the mobile services marketplace.
125
Verizon Wireless also asserts that the
Commission has recognized that Clearwire is currently using its substantial BRS/EBS spectrum holdings
to provide mobile broadband service.
126
Moreover, Verizon Wireless and Taran argue that because the
Commission included 20 megahertz of WCS spectrum in the 2.3 GHz band as part of the spectrum screen
119
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16469-70, ¶ 29; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd
at 10719, ¶ 59.
120
In prior transactions, the Commission has decided to include 55.5 megahertz of BRS spectrum in those markets
in which the transition to a new band plan suited for the provision of mobile broadband services has been completed.
See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17606, n.120; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17478, ¶ 65; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17596-99, ¶¶ 62-70.
121
See, e.g., Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17591-92, ¶ 53.
122
In the AT&T-WCS Order, we found that 20 megahertz of WCS spectrum – comprised of the paired A and B
Blocks – are suitable and available for the provision of mobile telephony/broadband services. See AT&T-WCS
Order, 27 FCC Rcd at 16470-71, ¶ 31.
123
Verizon Wireless Comments; Verizon Wireless Reply. See, e.g., Letter from Tamara Preiss, Vice President,
Federal Regulatory Affairs, Verizon Wireless, to Marlene H. Dortch, Secretary, FCC, dated May 8, 2013 (“Verizon
Wireless May 8, 2013 Ex Parte”); Letter from Tamara Preiss, Vice President, Federal Regulatory Affairs, Verizon
Wireless, to Marlene H. Dortch, Secretary, FCC, dated Apr. 8, 2013 (“Verizon Wireless Apr. 8, 2013 Ex Parte”).
See EBS Petitioners Reply at 2-4, 13-15; DISH Reply at 4-5, 11-13; Letter from Jeffrey H. Blum, Senior Vice
President and Deputy General Counsel, DISH, to Marlene H. Dortch, Secretary, FCC, dated Apr. 5, 2013, at 2
(“DISH Apr. 5, 2013 Ex Parte”); Taran Petition at 9; Taran Reply at 4-5.
124
Verizon Wireless Comments at 2; DISH Reply at 12-13, 16-17; EBS Petitioners Reply at 2-11; Verizon Wireless
May 8, 2013 Ex Parte at 1; Verizon Wireless Apr. 8, 2013 Ex Parte at 1-2; Taran Reply at 4. See generally EBS
Licensees Comments Supporting Verizon Request at 1-2, Exh. 1.
125
Verizon Wireless Comments at 3-9; Verizon Wireless Reply at 2-3, 5-6; Verizon Wireless Apr. 8, 2013 Ex Parte
at 2.
126
Verizon Wireless Comments at 6. For instance, Verizon Wireless points to a February 26, 2013 FCC staff white
paper, which identifies the full 194 megahertz of BRS/EBS spectrum as being available for mobile broadband
services in the U.S. See Letter from Kathleen Grillo, Senior Vice President of Federal Regulatory Affairs, to
Marlene H. Dortch, FCC, dated Mar. 4, 2013, at 1-2 (“Verizon Wireless Mar. 4, 2013 Ex Parte”) (citing WTB/OET
White Paper, “The Mobile Broadband Spectrum Challenge: International Comparisons” (Feb. 26, 2013)
(“International Spectrum White Paper”)); Verizon Wireless Apr. 8, 2013 Ex Parte at 2-3.
Federal Communications Commission FCC 13-92
18
applied in the AT&T-WCS Order,
127
the Commission also should include the additional BRS/EBS
spectrum, which these commenters assert is even more justified.
128
41. In response, the Applicants contend that since 2008, the Commission has consistently
reaffirmed the inclusion of the same amount of BRS spectrum and the exclusion of EBS spectrum when
applying its spectrum screen.
129
According to the Applicants, there have not been any new developments
since the Commission’s analysis of spectrum holdings in the most recent transactions that would justify a
significant departure from its existing spectrum screen.
130
The Applicants also contend that the issue is
best addressed in the context of the Mobile Spectrum Holdings rulemaking where the Commission has
developed a comprehensive record on the 2.5 GHz spectrum and other spectrum aggregation policies.
131
In addition, the Applicants note that the record in that proceeding supports continuing the Commission’s
current policy.
132
Moreover, the Applicants maintain that the Commission already has applied its
spectrum screen and approved the aggregation of the Sprint/Clearwire spectrum holdings in the 2.5 GHz
band in the Sprint-Nextel-Clearwire Order so that the Commission need not and should not reexamine
that public interest determination here.
133
42. We do not find the proposed transactions to be the appropriate proceeding to consider
whether to modify the screen to include more than 55.5 megahertz of the 2.5 GHz band. As discussed
below, for purposes of the screen we would attribute the same amount of spectrum to the same parties
before and after these transactions; therefore, if the screen were applied, it would identify no markets
whether or not we added the additional spectrum requested. As such, we decline to modify the spectrum
screen here. We note that even if we were to consider as relevant the competitive effects of Sprint’s
entire post-transaction holdings in the 2.5 GHz band, we would not find the proposed transactions to
likely result in competitive harm. We also note the ongoing rulemaking proceeding where many of the
same arguments are raised regarding whether to include the 2.5 GHz band and where additional issues
relevant to consideration of the 2.5 GHz band are under review.
134
Contrary to assertions by Verizon
127
See AT&T-WCS Order, 27 FCC Rcd at 16470-71, ¶ 31.
128
Taran Reply at 4-5; Verizon Wireless Comments at 6; Verizon Wireless Reply at 5-6; Letter from Tamara Preiss,
Vice President of Federal Regulatory Affairs, to Marlene H. Dortch, FCC, dated Apr. 26, 2013, at 2; Letter from
Tamara Preiss, Vice President of Federal Regulatory Affairs, to Marlene H. Dortch, FCC, dated Apr. 18, 2013, at 2.
Taran also argues that the timing of these proposed transactions is an attempt to obtain approval before the
Commission modifies its spectrum aggregation rules in the Mobile Spectrum Holdings proceeding. Taran Petition
at 9. However, Taran provides no support for its assertion.
129
Joint Opposition at iv, 28-32.
130
Id. at 29; Applicants Joint Reply to Comments at 4-5, dated Feb. 25, 2013.
131
Letter from Regina M. Keeney, Lawler, Metzger, Keeney & Logan, LLC, counsel for Sprint-Nextel, and John
Feore, Dow Lohnes PLLC, counsel for SoftBank, to Marlene H. Dortch, Secretary, FCC, dated May 1, 2013 at 2
(“Applicants May 1, 2013 Ex Parte”); Letter from Regina M. Keeney, Lawler, Metzger, Keeney & Logan, LLC,
counsel for Sprint-Nextel, and John Feore, Dow Lohnes PLLC, counsel for SoftBank, to Marlene H. Dortch,
Secretary, FCC, dated Mar. 12, 2013 at 4 (“Applicants Mar. 12, 2013 Ex Parte”).
132
Joint Opposition at 30. See also Applicants Joint Reply to Comments at 3-4; CTN and NEBSA Reply at 1-2
(asserting that this proceeding is not the place to consider a modification of the screen).
133
Joint Opposition at 31-32; Applicants Mar. 12, 2013 Ex Parte at 3-4. See also Applicants May 1, 2013 Ex Parte
at 1-2.
134
See, e.g., AT&T Comments at 37-41, 47-48, WT Docket No. 12-269; Verizon Wireless Comments at 23-26, WT
Docket No. 12-269; NTCH Comments at 5-6, WT Docket No. 12-269; Sprint Reply Comments at 19-27, WT
Docket No. 12-269; Clearwire Comments at 5-7, WT Docket No. 12-269, CCA Comments at 8, 15, WT Docket No.
(continued….)
Federal Communications Commission FCC 13-92
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Wireless and Taran, we find distinguishable our decision to add 20 megahertz of WCS spectrum to the
screen in the context of the AT&T/WCS transactions because in that case our decision largely was based
on recent major changes to the relevant service rules, a factor that is not applicable in the instant case.
135
For all these reasons, we decline to revise the Commission’s initial spectrum screen in the context of this
proceeding.
43. Market Participants. As in previous transactions, we will consider only facilities-based
entities providing mobile telephony/broadband services using cellular, broadband PCS, SMR, 700 MHz,
AWS-1, BRS and WCS spectrum to be market participants, but we will continue to assess the effect of
Mobile Virtual Network Operators (“MVNOs”) and resellers in our competitive evaluation.
136
C. Competitive Analysis of the Proposed Transactions
44. We start by noting that the initial screen, if it were applied, would identify no markets for
further review. First, as to the SoftBank/Sprint transaction, SoftBank does not hold any attributable
interest in any U.S. spectrum licenses or leases,
137
or provide mobile telephony/broadband service in any
local market in the United States.
138
Accordingly, there would be no change in spectrum or customer
concentration if we were to apply the initial screen before and after SoftBank’s proposed acquisition of a
78 percent ownership stake in Sprint (without regard to whether it has 100 percent ownership in
Clearwire). Second, as to the Sprint/Clearwire transaction, the Commission’s attribution policies for
applying the initial screen are to attribute the spectrum holdings and the customers of entities with more
than a 10 percent ownership affiliation to both entities.
139
Since the Commission approved Sprint’s
acquisition of substantial ownership interests in Clearwire in 2008, Sprint has held, for purposes of our
competitive analysis (including the initial screens), an attributable interest in Clearwire’s spectrum
holdings and mobile telephony/broadband retail customers.
140
Therefore, for purposes of applying the
(Continued from previous page)
12-269; Free Press Comments at 19, WT Docket No. 12-269. See generally Policies Regarding Mobile Spectrum
Holdings, WT Docket No. 12-269, Notice of Proposed Rulemaking, 27 FCC Rcd 11710, 11722-23, ¶¶ 28-29,
11725-28, ¶¶ 33-39 (2012).
135
See AT&T-WCS Order, 27 FCC Rcd at 16470-71, ¶ 31, n.88 (citing Amendment of Part 27 of the Commission’s
Rules to Govern the Operation of Wireless Communications Services in the 2.3 GHz Band, WT Docket No. 07-293,
Establishment of Rules and Policies for the Digital Audio Radio Satellite Service in the 2310-2360 MHz Frequency
Band, IB Docket No. 95-91, Order on Reconsideration, 27 FCC Rcd 13651, 13668, ¶ 36, 13677-78, ¶ 63, 13682-83,
¶¶ 73-75, and 13691-92, ¶ 100 (2012). We note that the record in the AT&T/WCS transactions was largely
uncontested on adding WCS spectrum to the screen.
136
See, e.g., AT&T-Verizon Wireless Order, 25 FCC Rcd at 8722, ¶ 41; AT&T-Centennial Order, 24 FCC Rcd at
13936, ¶ 45; Applications of AT&T Wireless Services, Inc. and Cingular Wireless Corporation For Consent to
Transfer Control of Licenses and Authorizations, WT Docket No. 04-70, Applications of Subsidiaries of T-Mobile
USA, Inc. and Subsidiaries of Cingular Wireless Corporation For Consent and Long-Term De Facto Lease of
Licenses, WT Docket No. 04-254, Applications of Triton PCS License Company, LLC, AT&T Wireless PCS, LLC,
and Lafayette Communications Company, LLC, for Consent to Assignment of Licenses, WT Docket No. 04-323,
Memorandum Opinion & Order, 19 FCC Rcd 21522, 21563, ¶ 92 (2004) (“Cingular-AT&T Wireless Order”).
137
Public Interest Statement at 4-6. SoftBank’s only telecommunications interest in the United States is JTA, which
is a wholly owned subsidiary of SoftBank Telecom. Id. at 5.
138
Applicants Mar. 12, 2013 Ex Parte at 2.
139
See, e.g., Sprint-Nextel-Clearwire Order, 23 FCC Rcd 17570, 17601-02, ¶ 78 (declining to attribute interests
below 10 percent). See also AT&T-Centennial Order, 24 FCC Rcd at 13917, ¶ 7, 13946-47, ¶¶ 71-74.
140
In 2008, Sprint held an approximate 51 percent interest in Clearwire. See Sprint-Nextel-Clearwire Order, 23
FCC Rcd at 17601, ¶ 77. Sprint now holds a 50.45 percent interest in Clearwire. Amendment at 3. Generally, the
Commission attributes ownership interest of 10 percent or more. See, e.g., Sprint-Nextel-Clearwire Order, 23 FCC
(continued….)
Federal Communications Commission FCC 13-92
20
initial screen, the proposed transactions do not result in any changes in the amount of spectrum and retail
customers attributed to Sprint.
141
We next turn to evaluating the competitive effects of the changes in
ownership resulting from the proposed transactions, with a focus on the various arguments raised by
petitioners and commenters.
1. Background
45. Clearwire as an Independent Provider. Crest and Taran, minority shareholders in
Clearwire, and DISH, an entity that has been pursuing strategic transactions with Sprint and Clearwire,
142
assert that the Commission should deny or condition the proposed transactions in order to maintain the
independence of Clearwire as a service provider.
143
For example, Taran claims that if Sprint obtains de
facto control of Clearwire, the U.S. wireless market would lose a stand-alone wholesale broadband
provider, potentially foreclosing the 2.5 GHz band from innovative uses.
144
Taran and DISH further
argue that, post-transaction, Sprint could have an incentive to limit roaming opportunities for domestic
and international providers in the 2.5 GHz band.
145
Crest requests that, if the Commission does not deny
both the proposed transactions, it should at least deny the Sprint/Clearwire transaction and mandate
divestiture of Sprint’s controlling interest in Clearwire by reversing the Sprint/Eagle River transaction.
146
46. The Applicants contend that the record contains no credible evidence that demonstrates a
likelihood of competitive harm and that, to the contrary, the proposed transaction will increase
competition by making Sprint stronger.
147
In particular, the Applicants contend that that the record does
not support assertions regarding the provision of wholesale service because Clearwire’s current wholesale
business relies primarily on Sprint as a customer; Clearwire would continue to honor its contractual
(Continued from previous page)
Rcd at 17601-02, ¶ 78 (declining to attribute interests below 10 percent). See also AT&T-Centennial Order, 24 FCC
Rcd at 13917, ¶ 7, 13946-47, ¶¶ 71-74.
141
The Commission generally has not applied its spectrum screen or its earlier spectrum cap when the concentration
of attributable spectrum is not changed by a proposed transaction. See, e.g., Applications of Atlantic Tele-Network,
Inc. and Cellco Partnership d/b/a Verizon Wireless For Consent To Assign or Transfer Control of Licenses and
Authorizations, WT Docket No. 09-119, Memorandum Opinion and Order, 25 FCC Rcd 3763, 3778, ¶ 29
(WTB/Int’l Bur. 2010) (noting that the spectrum screen is not implicated because Atlantic Tele-Network did not
hold spectrum in any of the markets that are the subject of the divestiture from Verizon Wireless); Applications of
VoiceStream Wireless Corporation, Powertel, Inc. Transferors, and Deutsche Telekom, AG, Transferee, for Consent
to Transfer Control of Licenses and Authorizations Pursuant to Sections 214 and 310(d) of the Communications Act
and Petition for Declaratory Ruling Pursuant to Section 310 of the Communications Act, IB Docket No. 00-187,
Memorandum Opinion and Order, 16 FCC Rcd 9779, 9824, ¶ 79 (2001) (applying the CMRS spectrum cap only in
markets in which Deutsche Telekom, which did not hold spectrum assets in the United States at that time, was
acquiring licenses from VoiceStream that overlapped with licenses that Deutsche Telekom was acquiring from
Powertel).
142
See ¶ 15 supra.
143
Crest Petition at 39-41; Taran Petition at 1-6; DISH Reply at 17-18.
144
Taran Petition at 1-6; Taran Reply at 2-3. See also Bloomberg BNA Daily Report for Executives, Martyn
Roetter and Alan Pearce, “The Sprint Transactions: A Chance for a Better Future” at 8 (filed by Information Age
Economics, May 8, 2012) (“Information Age Economics May 8, 2013 Ex Parte”).
145
Taran Petition at 7; Taran Reply at 2; Letter from Jeffrey H. Blum, Senior Vice President and Deputy General
Counsel, DISH, to Marlene H. Dortch, Secretary, FCC, dated Apr. 14, 2013 at 3 (“DISH Apr. 14, 2013 Ex Parte”).
146
Crest Petition at 42. See also Taran Petition at 10.
147
Joint Opposition at 3-5.
Federal Communications Commission FCC 13-92
21
wholesale obligations with existing customers; Sprint has a history of providing wholesale capacity to
MVNOs; and the other nationwide providers offer wholesale services.
148
47. Spectrum Holdings in the 2.5 GHz Band. Crest, Taran, DISH, and the two EBS
Petitioners contend that, in light of changes that have occurred since the 2008 Sprint Nextel-Clearwire
Order, the Commission must perform a new public interest analysis evaluating Sprint’s acquisition of full
control of Clearwire’s current spectrum holdings.
149
Further, DISH and the two EBS Petitioners assert
that, in order to conduct a proper public interest analysis, the Commission should require the Applicants
to submit a detailed listing of current spectrum holdings in each market.
150
48. Crest, Taran, DISH, CWA, and the two EBS Petitioners also claim that the substantial
amount of spectrum Clearwire holds would be underutilized by SoftBank and Sprint.
151
In particular,
Crest, DISH, and the two EBS Petitioners assert that there is no evidence that Sprint needs the full
amount of Clearwire’s spectrum holdings for its business plans.
152
Crest and Taran also express concern
that Sprint’s prior record as an investor in Clearwire demonstrates that, with 100 percent control of
Clearwire, Sprint would not efficiently deploy the 2.5 GHz spectrum.
153
DISH contends that the
Applicants should provide additional information regarding their plans, post-transaction, to use their
mobile broadband spectrum.
154
148
Id. at 5-8.
149
Crest Petition at 25; Crest Reply at 9-15; Taran Petition at 2, 7; Taran Reply at 5-6. DISH Reply at 3; DISH Apr.
14, 2013 Ex Parte at 3; EBS Petitioners Petition at 3-5; EBS Petitioners Reply at ii, 13-15. For example, DISH
asserts that one factor that has changed since 2008 is the global harmonization of the 2.5 GHz band for mobile
broadband. DISH Apr. 14, 2013 Ex Parte at 3; DISH Reply at 13. See also Information Age Economics May 8,
2013 Ex Parte at 6. To the extent that parties argue that the public interest will be harmed by foreign ownership by
SoftBank of Sprint’s increased interest in Clearwire, those arguments are addressed in Section VII.
150
DISH Reply at 19-20; EBS Petitioners Reply at 14-15. Subsequently, the Applicants filed a letter with a detailed
table showing Clearwire’s current holdings in the 2.5 GHz band and its holdings in 2008 when the Commission
approved the Sprint Nextel/Clearwire transaction. See generally Letter from Angela Y. Kung, Mintz Levin, counsel
for Clearwire, to Marlene H. Dortch, Secretary, FCC, dated Mar. 26, 2013, with Attachment. In response to the
Applicants’ March 26, 2013 filing, the two EBS Petitioners contend that the 2008 methodology Clearwire applies is
flawed and that Clearwire has made errors in its calculation of its current spectrum holdings. See Letter from
Rudolph J. Geist, RJG Law LLC, EBS Petitioners, to Marlene H. Dortch, FCC, dated Apr. 15, 2013, at 5-6.
151
Crest Petition at 4-5, 14-16; DISH Reply at 3-6, 11, 20-24; DISH Apr. 14, 2013 Ex Parte at 3; Taran Petition at
8; EBS Petitioners Petition at 4-5; CWA Petition at 7-8. See also Information Age Economics May 8, 2013 Ex
Parte at 6.
152
Crest Petition at 15; DISH Apr. 14, 2013 Ex Parte at 3; DISH Reply at 23-24; EBS Petitioners Petition at 4-5,
n.6, n.7. Crest also argues that if Sprint is entering into the proposed transactions without an intention to build out
Clearwire’s network, then Sprint may be in violation of the Commission’s anti-trafficking rules. Crest Petition at
10, n.39.
153
Crest Petition at 5, 12-15; Crest Reply at 5-9; Taran Petition at 7-9. DISH also asserts that Sprint’s general
record of spectrum efficiency for its licenses in other bands does not indicate that Sprint will efficiently use
Clearwire’s spectrum once it acquires 100 percent control of Clearwire. DISH Reply at 21.
154
See, e.g., Letter from Jeffrey H. Blum, Senior Vice President and Deputy General Counsel, DISH, to Marlene H.
Dortch, Secretary, FCC, dated May 30, 2013 at 1-2 (“DISH May 30, 2013 Ex Parte”); Letter from Jeffrey H. Blum,
Senior Vice President and Deputy General Counsel, DISH, to Marlene H. Dortch, Secretary, FCC, dated May 29,
2013 at 2 (“DISH May 29, 2013 Ex Parte”); Letter from Jeffrey H. Blum, Senior Vice President and Deputy
General Counsel, DISH, to Marlene H. Dortch, Secretary, FCC, dated Apr. 26, 2013 at 2 (“DISH Apr. 26, 2013 Ex
Parte”).
Federal Communications Commission FCC 13-92
22
49. These parties propose a range of potential remedies to address spectrum holdings issues
in the 2.5 GHz band. DISH proposes that the Applicants divest spectrum to new entrants in markets that
exceed the screen (as revised to include the full 2.5 GHz band)
155
as well as spectrum that the Applicants
cannot demonstrate that they will use.
156
The two EBS Petitioners assert that that the Commission either
should deny the applications or condition its approval on the divestiture of Clearwire’s EBS leases to U.S.
controlled entities.
157
Crest and Taran simply request that the Commission not permit Sprint to retain a
majority interest in Clearwire or to increase that interest.
158
CWA, the New Jersey Rate Counsel, and
DISH contend that the Commission should require the Applicants to meet new buildout requirements.
159
50. The Applicants reject arguments that the Commission should reexamine Sprint’s interest
in Clearwire’s spectrum, contending that the Commission generally does not reassess its earlier approval
of attributable spectrum holdings and that no factors in the instant case warrant such reexamination.
160
The Applicants assert that these proposed transactions should only further the deployment of competitive
and innovative broadband services.
161
Further, they contend that Sprint, as Clearwire’s largest investor
and customer, has invested substantial resources in Clearwire so that Clearwire can maximize its
spectrum use for mobile broadband service.
162
51. In addition, the Applicants maintain that the Commission should not adopt buildout
requirements because Clearwire and the EBS licensees that lease spectrum to Clearwire have met the
buildout obligations for the 2.5 GHz band; Sprint and SoftBank have a history of rapid deployment; and
no transaction-specific harm exists that would be remedied by buildout conditions.
163
The Applicants also
assert that a divestiture of Clearwire’s EBS leases would cause hardship and dislocation to the existing
parties to EBS leases and the EBS licensee community generally.
164
155
DISH Reply at 4-5.
156
Letter from Jeffrey H. Blum, Senior Vice President and Deputy General Counsel, DISH, to Marlene H. Dortch,
Secretary, FCC, dated Mar. 19, 2013 at 3 (“DISH Mar. 19, 2013 Ex Parte”).
157
EBS Petitioners Petition at 16-17. See also generally Letter from Rudolph J. Geist, RJG Law LLC, EBS
Petitioners, to Marlene H. Dortch, FCC, dated July 2, 2013.
158
Crest Petition at 42; Taran Petition at 10. See also Information Age Economics May 8, 2013 Ex Parte at 10
(asserting that Sprint should relinquish majority control of Clearwire but that arrangements should be made so that
Sprint has access to some 2.5 GHz spectrum to deploy a competitive mobile broadband network).
159
CWA Petition at i-ii, 2, 5-11; NJ Rate Counsel Reply at 4; DISH Reply at 23.
160
Joint Opposition at 25-28. They point out that the Commission approved the aggregation of Sprint/Clearwire’s
spectrum holdings in 2008 and the Commission has consistently attributed Clearwire’s spectrum to Sprint since that
decision. See Public Interest Statement at 29-30; Joint Opposition 24-28; Applicants Mar. 12, 2013 Ex Parte at 3-4.
161
Joint Opposition at 10-12. The Applicants also argue that Crest does not explain how Sprint, as the third largest
wireless provider and facing competition from value oriented providers, could engage in predatory pricing or other
anticompetitive behavior. See id. at 28, n.91.
162
Joint Opposition at 33, n.105 (citing Clearwire 2011 Annual Report at 2, 6).
163
Joint Opposition at 14-18.
164
Applicants Joint Reply to Comments at 6-7 (citing to 32 EBS Parties Opposition to EBS Petitioners Petition at 6-
7 (“32 EBS Parties Opposition”)). See also CTN and NEBSA Reply at 1-2 (opposing any condition that would
require Clearwire to divest or terminate EBS leases); HITN Opposition at 4-5.
Federal Communications Commission FCC 13-92
23
2. Discussion
52. We first consider here the harms alleged by certain petitioners and commenters that will
result from Clearwire not remaining an independent company. We find, as discussed below, that the
record does not support these concerns.
53. We also consider here the arguments raised concerning Sprint/Clearwire’s spectrum
holdings in the 2.5 GHz band.
165
As noted above, the Commission generally has considered 55.5
megahertz of BRS spectrum relevant to its competitive analyses in past transactions.
166
However, even if
we were to consider relevant to our competitive analysis Sprint/Clearwire’s total holdings of BRS and
EBS spectrum, we still would find, in response to these arguments, that the increase in Sprint’s interest in
Clearwire’s spectrum holdings would be unlikely to result in substantial competitive harm, as discussed
below.
167
54. Clearwire as an Independent Provider. As discussed above, certain parties argue that the
Commission should deny or condition the proposed transactions on the basis that the proposed
transactions would harm competition in the mobile wireless market by eliminating an “independent”
Clearwire (i.e., as it existed before the Eagle River transaction discussed below) that, among other things,
served as a stand-alone wholesale provider of mobile broadband service and a potential roaming partner
in the 2.5 GHz band. We do not find that the proposed transactions are likely to result in transaction-
specific harms related to the independence of Clearwire.
55. First, we do not find persuasive opponents’ arguments about possible competitive harms
relating to the provision of wholesale services. The public record indicates that Clearwire’s wholesale
business relies almost entirely on Sprint.
168
Thus, any loss of Clearwire’s sales of wholesale service to its
other customers would have only a minimal impact on the market. Further, as noted above, the
Applicants indicate that Clearwire will continue to honor its contractual wholesale obligations with its
other existing wholesale customers.
169
We also note that the four nationwide facilities-based providers,
165
As noted above, the Commission has not limited its competitive analysis to markets identified by the initial
screen. See ¶ 35 supra.
166
See note 120 supra.
167
See ¶¶ 58-61 infra. We note that SoftBank’s proposed acquisition of a 78 percent share of Sprint does not
change the results of our analysis that Sprint’s increased interest in Clearwire’s 2.5 GHz holdings would not likely
result in competitive harms. See also ¶¶ 107-108, 111-112, 123 infra (addressing arguments by DISH and the two
EBS Petitioners that foreign ownership by SoftBank of an interest in Clearwire’s 2.5 GHz holdings would result in
public interest harms).
168
Clearwire, Annual Report (Form 10-K), at 2, 123, Feb. 14, 2013, at
http://corporate.clearwire.com/secfiling.cfm?filingID=1445305-12-337&CIK=1442505 (“Clearwire 2012 10K”)
(noting that Sprint accounts for “substantially all” of wholesale sales to date and that it ended 2012 with 8.2 million
wholesale subscribers); Clearwire, Preliminary Proxy Statement (Form PREM14A), at 13, Feb. 1, 2013 (“Since the
formation of the Company, Sprint has been the Company’s largest wholesale customer accounting for substantially
all of the Company’s wholesale revenue . . . .”) (“Clearwire Proxy Statement”), at
http://corporate.clearwire.com/secfiling.cfm?filingID=1193125-13-33200&CIK=1442505. In addition, in
November 2011, Sprint agreed to pay Clearwire approximately $925.9 million for unlimited mobile WiMAX
services for 2012 and 2013, and will pay Clearwire additional usage-based fees for mobile WiMAX services
provided in 2014 and beyond. Clearwire 2012 10K at 3.
169
Joint Opposition at 7.
Federal Communications Commission FCC 13-92
24
including Sprint, offer wholesale service.
170
We therefore conclude that Sprint’s acquisition of Clearwire
will not have a significant anticompetitive effect on the sale of wholesale services.
56. We also find nothing in the record that suggests that approval of the proposed
transactions would result in potential transaction-specific harms regarding roaming. We remind the
parties in this proceeding that the Commission’s voice and data roaming rules apply to all facilities-based
providers, including Sprint.
171
57. Further, we observe that the reversal of the Eagle River transaction and refusal to
approve the Sprint/Clearwire transaction would not likely remedy the concerns expressed about
Clearwire’s “independence,” given the pre-existing relationship between Sprint and Clearwire pursuant to
the Equityholders Agreement. For example, certain actions such as the sale of spectrum would still be
subject to Sprint’s consent.
172
58. Spectrum Holdings in the 2.5 GHz Band. As summarized above, the focus of the
spectrum holding arguments made by parties concerns Sprint’s spectrum holdings in the 2.5 GHz band
post-transaction. Although we already attribute Clearwire’s spectrum holdings to Sprint (as a result, as
noted above, of Sprint’s ownership of an attributable interest in Clearwire, which interest currently stands
at 50.45 percent), we here evaluate the arguments made by parties regarding the potential anticompetitive
effects associated with Sprint obtaining, through this transaction, 100 percent stock ownership in and de
facto control of Clearwire and its spectrum holdings in the 2.5 GHz band.
173
In particular, we assess the
likelihood and extent to which those changes may raise competitors’ costs or foreclose competitors and/or
potential new entrants from expanding capacity, deploying mobile broadband technologies, or entering
the market, such that consumer choice or service quality would be reduced.
174
59. Based on our assessment, the increase in Sprint’s interest in Clearwire’s 2.5 GHz
spectrum holdings does not raise substantial competitive concerns. We reach this conclusion based on a
combination of factors. We observe that the proposed increase in Sprint’s interest in Clearwire is unlikely
as a matter of fact to reduce competitors’ access to 2.5 GHz spectrum because, as noted above,
Clearwire’s current revenue stream already is almost entirely derived from Sprint, with competitors to
Sprint generally not using Clearwire’s spectrum to deploy advanced broadband technologies or mobile
broadband service offerings. Further, we note the availability of certain other bands, such as AWS-1, to
competitors other than Sprint with similar technical characteristics and without the challenges to
deploying a mobile broadband network that the Commission previously found to exist in the 2.5 GHz
band (e.g., co-existing with high power adjacent video operations in the middle band segment, and
aggregating spectrum by leasing excess capacity from site-based EBS licensees that have a separate
170
See Sixteenth Annual Competition Report, 28 FCC Rcd at 3740, ¶ 33, Table 1.
171
See 47 C.F.R. § 20.12.
172
According to the Equityholders’ Agreement, any sale of spectrum either as a single transaction or a series of
related transactions that have an aggregate purchase price in excess of 20 percent of Clearwire’s consolidated assets
would have to have approval of 10 of the 13 board members. See Equityholders’ Agreement, Nov. 28, 2008 at 23.
We reject below arguments by DISH and Crest that the Eagle River transaction gave Sprint de facto control of
Clearwire, as evidenced in part by the process and actions undertaken by the Clearwire Board to evaluate competing
offers by Sprint and DISH for interests in Clearwire. See ¶ 149 infra.
173
We also evaluated the potential anticompetitive effects of spectrum holdings in the AWS-1 and WCS bands in
recent transactions. See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16472, ¶ 34; Verizon Wireless-SpectrumCo Order,
27 FCC Rcd at 10725-27, ¶¶ 72-74.
174
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16472, ¶ 34; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10725-27, ¶¶ 72-74.
Federal Communications Commission FCC 13-92
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educational mission).
175
Overall, we find that, together, these factors make it unlikely that, as a result of
Sprint’s increased interest in Clearwire’s 2.5 GHz spectrum, Sprint would have the ability to raise rivals’
costs or foreclose expansion by holding this spectrum, even if it were to have the incentive to do so, in a
local market or at the national level.
176
60. In addition, we are not persuaded by the assertions that the proposed transactions would
result in the underutilization of Clearwire’s spectrum and that this warrants conditions on buildout,
divestiture of spectrum, or investment commitments. We note that Sprint and Clearwire have undertaken
significant efforts over the years to utilize the 2.5 GHz spectrum. Clearwire has met its substantial
service requirements for its BRS licenses, and Clearwire’s operations have substantially contributed to
many EBS licensees’ satisfaction of their service requirements.
177
In addition, Sprint and Clearwire
satisfied the 2.5 GHz band buildout commitments set forth in the Sprint-Nextel Order more than a year
ahead of the Commission’s deadline.
178
We also observe that, since its initial equity investment in
Clearwire in 2008, Sprint has made substantial additional investments in Clearwire, such as providing
175
See Sprint-Nextel-Clearwire Order, 23 FCC Rcd at 17598-99, ¶¶ 67-71 (declining to include more than 55.5
megahertz of BRS spectrum in the screen due to specific features associated with other portions of the 2.5 GHz
band). We note that we are not prejudging here our ongoing consideration in the Mobile Spectrum Holdings
proceeding of the “suitability” and “availability” for mobile telephony/broadband service of the portion of the 2.5
GHz band not currently included in our competitive analysis. Mobile Spectrum Holdings NPRM, 27 FCC Rcd at
11722-23, ¶¶ 28-29.
176
We note that, in our analysis of the AT&T/WCS transaction, we similarly concluded that competition was
unlikely to be harmed, though for different reasons. In that case, we noted the limited amount of unencumbered
WCS spectrum available for the provision of mobile broadband (20 megahertz) and the lack of a well-established
ecosystem in that band in the United States. See AT&T-WCS Order, 27 FCC Rcd at 16473, ¶ 37. In addition, in the
Wireless Telecommunications Bureau’s analysis of the T-Mobile/MetroPCS transaction, the Bureau concluded that
competition was unlikely to be harmed, because although the newly combined entity would hold a substantial
amount of AWS-1 spectrum post-transaction, it was not unencumbered greenfield spectrum and both service
providers were independently likely to be facing spectrum constraints in their LTE deployment. See Applications of
Deutsche Telekom AG, T-Mobile USA, Inc. and MetroPCS Communications, Inc. for Consent to Transfer of Control
of Licenses and Authorizations, WT Docket No. 13-384, Memorandum Opinion and Order and Declaratory Ruling,
DA 13-384, 28 FCC Rcd 2322, 2339-40, ¶ 53 (Int’l Bur. and WTB 2013). By contrast, in the Verizon
Wireless/SpectrumCo transactions, we did find cause for concern, because post-transaction, Verizon Wireless would
hold a significant amount of greenfield AWS-1 spectrum, with a well-established ecosystem, raising serious
concerns about how the proposed transactions could raise rivals’ costs or lead to other competitive harms. See
Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10724-25, ¶ 70.
177
See, e.g., Buildout Notification for Station B078 (filed Mar. 17, 2011, accepted May 3, 2011); Buildout
Notification for Station WNTA285, The Board of Trustees of the Leland Stanford Junior University (filed Apr. 20,
2011, accepted May 18, 2011). See generally 47 C.F.R. § 27.14(o) for BRS and EBS buildout requirements.
Section 27.14(o) required BRS and EBS licensees to make a showing of “substantial service” in their Geographic
Service Area (“GSA”) by May 1, 2011. The Wireless Telecommunications Bureau subsequently provided EBS
licensees with an additional six months, to November 1, 2011, to meet the substantial service obligations. See
National EBS Association and Catholic Television Network, Memorandum Opinion and Order, WT Docket No. 11-
22, 26 FCC Rcd 4021, 4021, ¶ 1 (WTB 2011).
178
See Sprint-Nextel Order, 20 FCC Rcd at 14028-29, ¶¶ 164-65 (adopting service requirements for Sprint-Nextel).
Clearwire agreed to meet those obligations imposed in the Sprint-Nextel/Clearwire transaction. See Sprint-Nextel-
Clearwire Order, 23 FCC Rcd 17570. See also Letter from Cathleen A. Massey, Vice President, Regulatory Affairs
and Public Policy, Clearwire, to Marlene H. Dortch, Secretary, FCC, WT Docket Nos. 08-94 and 05-63, filed Aug.
4, 2009 at 1, nn.1, 2.
Federal Communications Commission FCC 13-92
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Clearwire with debt financing, an unsecured promissory note, and prepayment for wholesale LTE sales.
179
We anticipate that, as the Applicants have asserted, the SoftBank/Sprint transaction will assist in
providing the resources to further transition Clearwire’s network to LTE technology and that this
spectrum is not likely to be underutilized as a result of the proposed transactions.
180
61. Based on the record before us, we find that the proposed transactions are unlikely to
result in competitive or public interest harms,
181
and we anticipate that SoftBank/Sprint will continue to
rapidly deploy advanced mobile networks using their spectrum holdings. As a result, we are not
persuaded by requests that the Commission impose buildout requirements, require divestitures of
spectrum, or request investment commitments by the Applicants.
182
D. Other Issues
62. Sprint’s 800 MHz rebanding obligations. DISH asks the Commission to impose
conditions on Sprint in this proceeding relating to Sprint’s fulfillment of its 800 MHz transition
obligations in the 800 MHz Report and Order.
183
DISH argues that Sprint “has failed to live up to its end
of the bargain” struck with the Commission regarding its 1.9 GHz license and the reconfiguration of the
800 MHz Band and should therefore be required to honor those commitments before consummating the
proposed transactions.
184
DISH concludes that the Commission should require SoftBank/Sprint to both
complete the transition and true up with the Treasury prior to the closing of SoftBank’s acquisition.
185
63. The Applicants have affirmed that “[p]ost-closing, SoftBank and Sprint will remain fully
committed to satisfying Sprint’s reconfiguration obligations as set forth in the FCC’s rules and
policies.”
186
In addition, they dispute DISH’s claims, asserting that Sprint has complied with all of its
179
Clearwire Corporation, Form 10 K (Feb. 14, 2013) at 3, 11, 103. We also are not persuaded that Sprint’s use of
spectrum in bands other than 2.5 GHz warrants imposition of buildout conditions on Sprint’s deployment of service
in the 2.5 GHz and 1.9 GHz bands, as advocated by DISH. DISH Reply at 21-23. The relocation of licensees in the
broadcast auxiliary service (“BAS”) and 800 MHz bands was not wholly within Sprint’s control because the timing
and cost of relocation had to be negotiated with incumbent BAS and 800 MHz licensees and, with respect to some
800 MHz licenses, because of the need for the United States to amend spectrum use agreements with Mexico and
Canada.
180
Public Interest Statement at i-iii, 23-29; Joint Opposition at 10-12; Amendment at 4-5. In addition, given our
conclusion that this spectrum is not likely to be underutilized as a result of the proposed transactions, we do not find
persuasive Crest’s contention that Sprint’s acquisition of 100 percent control of Clearwire is inconsistent with the
Commission’s anti-trafficking rules. Crest Petition at 10, n.39.
181
We are not persuaded that any issues raised regarding the accuracy of Clearwire’s representation of its spectrum
holdings would lead to a material change in our conclusions. EBS Petitioners Apr. 15, 2013 Ex Parte at 5-6.
182
In contrast, we note that the Commission conditioned approval of the Verizon Wireless/SpectrumCo transaction
on those Applicants’ commitment to a more aggressive buildout schedule for its AWS licenses because the buildout
deadlines for those licenses were nine years into the future and the Applicants had not yet deployed on that
spectrum. See Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10700, ¶ 4, 10739, ¶¶ 107, 108, 110.
183
DISH Reply at 6-7, 25-32. See also Improving Public Safety Communications in the 800 MHz Band, Report and
Order, Fifth Report and Order, Fourth Memorandum Opinion and Order, 19 FCC Rcd 14969 (2004) (“800 MHz
Report and Order”).
184
DISH Reply at 7, 25-26, 31-32.
185
Id. at 31-32. As part of this condition, DISH requests that the Commission require SoftBank/Sprint to waive the
right to receive any further reimbursement for clearing the H and J Blocks. Id. See also DISH Mar. 19, 2013 Ex
Parte at 3-4.
186
Public Interest Statement at 30.
Federal Communications Commission FCC 13-92
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obligations and has taken all the steps within its control to complete 800 MHz rebanding “as
expeditiously as possible.”
187
They claim that Sprint has strong incentives to complete this process as
soon as possible, both to minimize the risk of interference among 800 MHz commercial and public safety
communications systems, and to maximize the use of its reconfigured 800 MHz spectrum for broadband
service.
188
In addition, the Applicants assert that Sprint has to date spent more than $3.1 billion in support
of 800 MHz reconfiguration and, in combination with public safety and other incumbents, has achieved
substantial progress toward completing the Commission’s band reconfiguration plan.
189
64. The 800 MHz band reconfiguration proceeding, WT Docket No. 02-55, is a separate and
ongoing proceeding.
190
As discussed above, the Applicants have indicated that they are fully committed
to satisfying Sprint’s 800 MHz band reconfiguration obligations.
191
These are important commitments
that involve unique and potentially significant financial obligations to the U.S. Treasury, and accordingly
we condition approval of these transactions on both the post-transaction Sprint Corporation and its
indirect owner SoftBank assuming all obligations of Sprint with respect to the reconfiguration of the 800
MHz band, including without limitation, those set out in the 800 MHz Report and Order and subsequent
Commission orders in WT Docket No. 02-55.
192
65. Price offered by Sprint for Clearwire’s shares. Crest, a minority shareholder in
Clearwire, raises concerns regarding the inadequacy of the price of Clearwire’s shares in Sprint’s offer.
Crest argues that Sprint and SoftBank have embarked on a multi-stage mission to acquire control of
Clearwire at the expense of Clearwire shareholders and the public interest.
193
In that context, Crest
maintains that the Sprint/Clearwire transaction grossly undervalues Clearwire’s spectrum,
194
and would
undermine the Commission’s policy goals for the upcoming incentive auction by setting an artificially
low benchmark for the price of spectrum.
195
66. The Applicants respond that these issues raised by Crest are meritless, and not relevant to
the Commission’s review of the proposed transactions under the Act,
196
and would require the
187
Joint Opposition at 17.
188
Id.
189
Id.
190
See, e.g., Sprint Nextel Corp. has filed a petition for declaratory ruling with respect to certain of its 800 MHz
rebanding obligations. See Sprint Nextel Corp., Petition for Declaratory Ruling, WT Docket No. 02-55 (filed Jan.
22, 2013).
191
Public Interest Statement at 30.
192
See generally 800 MHz Report and Order, 19 FCC Rcd 14969.
193
Crest Petition at 27-28, 31-35.
194
Crest Petition at 16-18; Crest Reply at 16, Exhibit A (“Valuation of Clearwire’s 2.5 GHz Band Spectrum Assets”
by Martyn Roetter and Alan Pearce, Information Age Economics); Crest Mar. 12, 2013 Ex Parte at 2-3, Exhibit A
(“An Assessment of the Economic and Industry Reasonableness of Sprint’s Offer for Clearwire” by Harold
Furchtgott-Roth, Furchtgott-Roth Economic Enterprises, David Sosa and Elizabeth Stone, Analysis Group); Crest
Apr. 8, 2013 Ex Parte at Exhibit A (“A Review of ‘Value and Utility of the U.S. 2.5 GHz Spectrum Band” by
Harold Furchtgott-Roth, Furchtgott-Roth Economic Enterprises). See also EBS Petitioners Apr. 15, 2013 Ex Parte
at 2-4; Information Age Economics May 8, 2013 Ex Parte at 6-7.
195
Crest Petition at 16-23; Crest Reply at 6, 19.
196
Joint Opposition at 33-38; Applicants Mar. 12, 2013 Ex Parte at 5, n.16. See also Applicants May 1, 2013 Ex
Parte at 2-3.
Federal Communications Commission FCC 13-92
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Commission to intervene in private shareholder disputes in contravention of the Commission’s
longstanding policy of avoiding such intervention.
197
In particular, the Applicants assert that the price
Sprint negotiated with Clearwire is not depressed;
198
that Clearwire took care to ensure that the
Sprint/Clearwire transaction was fair to minority shareholders;
199
and that the Sprint/Clearwire transaction
would not influence bidding in the incentive auction.
200
67. To the extent that Crest and Taran assert that Sprint has violated their rights as
shareholders in Clearwire, we decline to address these issues, as the Commission generally defers
adjudication and resolution of such state law and contract-based assertions to the appropriate state or local
fora.
201
Indeed, in this case, Crest notes that it has already initiated litigation in a state court.
202
Our
approval of these transactions will not foreclose such avenues for redress. In addition, we find that the
price paid by Sprint for 100 percent control of Clearwire is not likely to have any significant effect on the
prices that may be paid for spectrum in future incentive auctions. We also note that since Crest filed its
comments, Sprint raised its bid for Clearwire’s shares by approximately 50 percent.
203
68. Jobs. CWA and Greenlining request that in considering the public interest effects of the
SoftBank/Sprint transaction, the Commission should consider the potential impact on jobs. In particular,
CWA asserts that this transaction will not lead to significant job creation at Sprint due, in part, to Sprint
outsourcing its customer service operation.
204
Moreover, CWA maintains that the proposed transaction
would strengthen the position of Chinese communications equipment manufacturers in the United
States.
205
Greenlining argues that the Commission should investigate the potential impact the proposed
transaction may have on Sprint’s employees, and Greenlining also points to one statement regarding job
creation that was made in the Application.
206
Greenlining alternatively argues that even if the Applicants
197
Joint Opposition at 32, 37-38.
198
Id. at 32-33.
199
Id. at 33-34. See also Applicants May 1, 2013 Ex Parte at 3; Letter from Angela Y. Kung, counsel for Clearwire,
Mintz Levin, to Marlene H. Dortch, Secretary, FCC, dated Apr. 15, 2013, at 1-2 (“Clearwire Apr. 15, 2013 Ex
Parte”).
200
Joint Opposition at 37, n.115.
201
See, e.g., Wireless Properties of Virginia, Inc. Assignor and Nextel Spectrum Acquisition Corp., Assignee,
Memorandum Opinion and Order, 22 FCC Rcd 1287, 1292 (Broadband Div./WTB 2007) (“Whether WPV is in
good standing with the state of Delaware is a matter of state law and should be dealt with by a state court.”).
202
Crest Petition at 28, n.77 (citing pending state court case).
203
See Clearwire Special Committee and Board of Directors Change Recommendation In Favor Of Sprint Merger
Based On Revised Offer of $5.00 Per Share, Clearwire Press Release, dated June 26, 2013, available at
http://corporate.clearwire.com/releasedetail.cfm?Releaseid=772795 (last visited June 26, 2013). See ¶ 15 supra.
204
CWA Petition at 14-15.
205
Id. at 15.
206
Greenlining Opening Comments at 10. In particular, Greenlining points to the Applicants’ statement that: “The
resulting greater competition and innovation can in turn stimulate economic growth and promote job creation.”
Public Interest Statement at 14. See also Greenlining Reply at 2.
Federal Communications Commission FCC 13-92
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fail to raise the issue of jobs, this does not preclude the Commission from including the impact on jobs in
its public interest analysis of the proposed transaction.
207
69. In the Joint Opposition, the Applicants respond that they did not assert that any job-
related public interest benefits would result from the transaction. Specifically, the Applicants contend
that they did not rely on job growth in their Application and did not make any projections as to the
number of new jobs that could result from the transactions.
208
The Applicants further argue that
Greenlining’s request for an investigation of the effects the transaction may have on Sprint’s employees
would be outside the scope of the Commission’s public interest review and expertise.
209
Moreover, the
Applicants maintain that Greenlining did not substantiate their claims with any evidence that there would
be changes in terms of employment at Sprint.
210
In addition, the Applicants claim that CWA’s contention
that Sprint is shipping a significant number of jobs overseas is incorrect.
211
Finally, the Applicants
conclude that the Commission should reject these “groundless assertions,” which are unrelated to the
Commission’s review of the transactions.
212
70. We are not persuaded by the arguments raised by CWA and Greenlining concerning the
potential impact on jobs. Our assessment of the record for this proceeding leads us to conclude that the
alleged potential public interest harms regarding jobs are speculative and unsubstantiated.
71. Compliance with EBS obligations. The two EBS Petitioners contend that Clearwire has
failed to be an acceptable steward of EBS spectrum, has not ensured compliance with the Commission’s
educational use obligations applicable to EBS licenses, and has used its market power to leverage EBS
licensees into leases that minimize educational usage rights.
213
The EBS Petitioners argue that the
Commission should not allow Clearwire to “pass the buck” onto SoftBank, a foreign controlled entity, for
compliance with the educational use obligations.
214
The two petitioners claim that Clearwire’s EBS
leases violate minimum educational reservation requirements and frustrate their ability to implement
educational usage.
215
They urge the Commission to require Clearwire to provide data relating to
compliance with EBS educational usage and leasing requirements because the ability to validate the
actual percentage of educational account usage on Clearwire’s network is allegedly the only way to
measure and evaluate Clearwire’s compliance.
216
The EBS Petitioners also allege that the transaction
may violate unspecified state non-profit corporation laws.
217
They ask the Commission to deny the
207
Greenlining Reply at 2. Greenlining also asserts that it is unclear whether Sprint’s new board of directors will
maintain the same commitment to workforce and supplier diversity and urges the Commission to investigate Sprint’s
post-transaction plans regarding diversity. Greenlining Opening Comments at 10.
208
Joint Opposition at 38, n.121.
209
Joint Opposition at 38-39. In response to Greenlining’s request for an investigation into plans concerning
diversity, the Applicants contend that Greenlining does not point to any facts that would warrant such an
investigation. Id. at 54, n.170.
210
Id. at 39.
211
Id.
212
Id.
213
EBS Petitioners Petition at ii, 2, 6-8.
214
Id. at ii, 2, 6-8. See ¶ 107 infra.
215
EBS Petitioners Petition at 8-12.
216
Id. at 13.
217
Id. at 15-16.
Federal Communications Commission FCC 13-92
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proposed applications or, at a minimum, to condition approval on the divestiture by Clearwire of all its
EBS spectrum leases to U.S. controlled entities that can preserve the benefits of EBS.
218
72. In their Joint Opposition, SoftBank and Sprint argue that the petitioners’ claims concern a
private dispute and are not transaction-specific, and that in any event the EBS entities, not Clearwire, are
the parties obligated to ensure that EBS spectrum is appropriately used.
219
The Applicants also contend
that Clearwire and the EBS entities with which it has entered into leasing arrangements have complied
with the applicable Commission requirements, and that no additional data is necessary because the EBS
entities have already certified compliance with the minimum education reservation requirements.
220
Finally, the Applicants assert that alleged potential violation of state corporate laws is irrelevant to the
transaction and without merit.
221
73. In addition to the Applicants, a wide variety of EBS licensees that lease spectrum to
Clearwire, including the National EBS Association (NEBSA) and the Catholic Television Network
(CTN), oppose the petition. They strongly disagree with the petitioners’ assertions that Clearwire has
failed to comply with the educational use obligations, stating instead that Clearwire facilitates and
supports their compliance with EBS requirements.
222
218
Id. at 16-17.
219
Joint Opposition at 44-45.
220
Id. at 45-50.
221
Id. at 50-52.
222
Opposition to Petition to Deny, Catholic Television Network and the National EBS Association (dated Feb. 12,
2013) (“CTN/NEBSA Opposition”); Opposition of Clarendon Foundation, Inc. (filed Feb. 12, 2013) (“Clarendon
Opposition”); Comments on Petition to Deny, Chicago Instructional Technology Foundation, Denver Area
Educational Telecommunications Consortium, Instructional Telecommunications Foundation, Portland Regional
Educational Telecommunications Corporation, and Twin Cities Schools’ Telecommunications Group (dated Feb.
12, 2013) (“CITF Parties Opposition”); Opposition of EBS Parties to Petition to Deny (Association for Continuing
Education, Belmont University, California State University, Sacramento, Dallas County Community College
District, Dallas-Fort Worth Hospital Council, Emerson College, Emory University, Georgia Institute of Technology,
Georgia State University, Greater Dayton Public Television, Inc., President and Fellows of Harvard College,
Johnston Community College/Meredith College ITFS Consortium, Junior College District of Metropolitan Kansas
City, Missouri, KCTS Television, Los Rios Community College District, New Jersey Public Broadcasting
Authority, Northeastern University, Oregon Public Broadcasting, Portland Community College, Public Television
19, Inc., The Regents of the University of California, Region IV Education Service Center, Richardson Independent
School District, Santa Clara County Board of Education, St. Christopher’s School of the Church Schools of the
Diocese of Virginia, St. Petersburg College, The University of Central Florida, University of Maryland, University
of North Carolina, University of South Florida, The University of Texas Health Science Center at Houston, and
Valencia College (dated Feb. 12, 2013) (“EBS Parties Opposition”); HITN Opposition; Comments on Petition to
Deny, North American Catholic Educational Programming Foundation, Inc. (dated Mar. 1, 2013) (“NACEPF
Opposition”); Opposition of School Board of Pinellas Country Florida (dated Feb. 12, 2013); Opposition to Petition
to Deny, The Source for Learning, Inc. (dated Feb. 12, 2013) (“SFL Opposition”). While several of these EBS
licensees – HITN, NACEPF, and the CITF Parties – do not support the contention by the EBS Petitioners that
Clearwire has failed to comply with the educational use obligations, they assert in recent ex parte filings that the
Commission should consider how the increase in Sprint’s interest in Clearwire would affect the educational mission
of EBS licensees. Filing from Jose Luis Rodriguez, President, HITN, John Primeau, President, NACEPF, to FCC,
dated June 27, 2013; Filing from John B. Schwartz, President, CITF Parties, to FCC, dated June 28, 2013. We find
that HITN, NACEPF, and the CITF Parties have not demonstrated a likelihood of potential transaction-specific harm
that warrants imposing conditions on the proposed transactions.
Federal Communications Commission FCC 13-92
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74. We find that the issues that the two EBS Petitioners raise are not transaction-specific, and
therefore deny their challenge. The Commission generally will not impose conditions to remedy pre-
existing harms unrelated to the transaction at issue.
223
The EBS Petitioners argue that any of Sprint’s or
Clearwire’s compliance (or lack of compliance) with any Commission rules speaks to the question of
whether the Commission may approve the transaction and thus the issues are transaction-specific.
224
We
disagree. As SoftBank and Sprint have pointed out, EBS licensees such as EBS Petitioners, not
Clearwire, are responsible for compliance with the educational programming and use requirements.
225
Regarding the two EBS Petitioners’ claim that Clearwire’s leases have frustrated their abilities to provide
educational use over the reserved capacity,
226
this claim is undermined by the fact that both of the EBS
Petitioners certified that they were in compliance with the educational use requirements.
227
And, as noted
above, a wide variety of EBS licensees opposing the petition also argue that the leases have supported,
rather than frustrated, educational use.
228
75. Availability of low-cost service plans. Greenlining asserts that Sprint traditionally has
offered wireless phone services that are somewhat more affordable to low-income customers and that,
post-transaction, Sprint could find it more profitable to begin eliminating its low-cost plans.
229
Greenlining asks the Commission to consider the effect of the proposed transaction on low-income and
minority consumers.
230
223
See, e.g., AT&T-Qualcomm Order, 26 FCC Rcd at 17622 ¶ 79; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17463 ¶ 29; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17582 ¶ 22; Cingular-AT&T Wireless Order, 19 FCC
Rcd at 21546 ¶ 43.
224
EBS Petitioners Reply at 25, n.70.
225
47 C.F.R. § 27.1214 sets forth programming and use requirements that the EBS licensee must comply with
before it leases spectrum for non-educational purposes. See, e.g., 47 C.F.R. § 27.1214(a)(1) (“Before entering into a
spectrum leasing arrangement involving material other than educational programming on any one channel, the
licensee must provide at least twenty hours per week of educational programming . . . .”).
226
EBS Petitioners Petition at 11.
227
See File No. 0004867672 (filed Sep. 8, 2011), WNC484 Demonstration of Substantial Service at 3 (“Licensee
certifies that it is in compliance with the programming and minimum usage requirements set forth in Sections
27.1203 and 27.1214 of the Commission’s rules.”); File No. 0004778878 (filed June 23, 2011) (Roman Catholic
Diocese of Erie, PA meets substantial service requirement for Station WND524 by demonstrating compliance with
educational use safe harbor contained in 47 C.F.R. § 27.14(o)(2)); File No. 0004909358 (filed Oct. 12, 2011),
WND589 Demonstration of Substantial Service at 4 (Roman Catholic Diocese of Erie, PA certifies compliance with
educational use requirements for Station WND589).
228
See, e.g., CTN Opposition at 5 (“EBS leases facilitate rather than frustrate EBS licensees in the use of their
spectrum, and Petitioners provide no evidence of any violations of the Commission’s rules . . . effective use of EBS
has been greatly enhanced by the strategic partnerships that have been forged between educators and commercial
operators, including Clearwire.”); HITN Opposition at 2 (“Far from the industry pariah described by Petitioners, in
HITN’s experience Clearwire has been a good partner to educators . . . .”); NACEPF Opposition at 2 (“Our future
ability to continue to provide…services will…depend on Clearwire’s continued use of EBS spectrum as well as the
quality and extent of its LTE network.”); Pinellas Opposition at 5 (Pinellas “rejects the suggestion that the lease
frustrates its ability to provide educational services over its spectrum, now or in the future, or that the lease raises
any other compliance concerns under Commission rules.”).
229
Greenlining Opening Comments at 5, 6.
230
Greenlining Reply at 2.
Federal Communications Commission FCC 13-92
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76. The Applicants respond that there is nothing in SoftBank’s history that warrants such
concern and that SoftBank has a history of reducing consumer prices while expanding opportunities for
all consumers to access wireless technology.
231
Further, they assert that the transactions would strengthen
the wireless service already provided over the Sprint/Clearwire spectrum holdings, “including offerings
attractive to low-income subscribers.”
232
In addition, they assert that all major providers have tailored
products and efforts for serving low-income consumers, and a number of providers specifically target this
customer segment.
233
77. We find that the record does not demonstrate that the transactions would have an adverse
effect on low-income consumers or minority consumers. We are not persuaded that consumers of
Sprint’s more affordable services would suffer reduced options for service plans as a result of approval of
these transactions. As a result, we decline to adopt the requested relief.
78. Resale of Sprint service to MVNOs. The MVNO Association asserts that the
Commission should condition approval of the SoftBank/Sprint transaction on the offering mobile wireless
service for resale to MVNOs on commercially reasonable terms and conditions, either by continuing
existing resale agreements that the MVNOs have with Sprint or by negotiating resale agreements with
MVNOs on commercially reasonable terms and conditions that are reasonably similar to existing
agreements with Sprint.
234
The MVNO Association states that, absent such a condition, its members will
be unable to provide mobile service to subscribers that rely on prepaid and low-cost mobile wireless
service.
235
79. We find that the record does not demonstrate that it is necessary or appropriate to impose
resale conditions in the context of the proposed SoftBank/Sprint transaction. The Commission sunset
resale obligations in 2002 for CMRS providers,
236
and we see no reason to revisit that decision in the
231
Joint Opposition at 9-10.
232
Id. at ii.
233
Id. at 10.
234
Letter from Karen Brinkman, Counsel, MVNO Association, to Marlene H. Dortch, Secretary, FCC, dated June
12, 2013 at 2 (“MVNO Association June 12, 2013 Ex Parte”). See also Letter from Karen Brinkman, Counsel,
MVNO Association, to Marlene H. Dortch, Secretary, FCC, dated June 21, 2013 at 1-2.
235
MVNO Association June 12, 2013 Ex Parte at 2.
236
See Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, CC Docket No.
94-54, First Report and Order, 11 FCC Rcd 18455, 18468-69 ¶ 24 (1996), aff'd sub nom. Cellnet Communications v.
FCC, 149 F.3d 429 (6th Cir. 1998) (establishing a sunset period five years after the date of the award of the last
group of initial licenses for broadband PCS); Personal Communications Industry Association's Broadband Personal
Communications Services Alliance's Petition for Forbearance for Broadband Personal Communications Services;
Forbearance from Applying Provisions of the Communications Act to Wireless Telecommunications Carriers, WT
Docket No. 98-100; Further Forbearance from Title II Regulation for Certain Types of Commercial Mobile Radio
Service Providers, GN Docket No. 94-33, Memorandum Opinion and Order on Reconsideration, 14 FCC Rcd 16340
(1999); Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, CC Docket No.
94-54, Order on Reconsideration of Memorandum Opinion and Order on Reconsideration, 15 FCC Rcd
16221 (2000). On July 2, 1998, a public notice was issued announcing that the five-year period had commenced as
of November 25, 1997, the date on which the Commission completed its award of the last group of initial licenses
for currently allocated broadband PCS spectrum. The public notice states that the resale rule will terminate at the
close of November 24, 2002. See Commencement of Five-Year Period Preceding Termination of Resale Rule
Applicable to Certain Covered Commercial Mobile Radio Service Providers, CC Docket No. 94-54, Public Notice,
13 FCC Rcd 17427 (1998).
Federal Communications Commission FCC 13-92
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context of these transactions, particularly given that we do not find that the proposed transactions would
lead to competitive harms, as discussed above.
237
80. Open Internet. Greenlining asserts that post-transaction, Sprint will have incentives to
prioritize certain traffic on its network.
238
Specifically, Greenlining asserts that SoftBank has ownership
interests in, or longstanding relationships with, a number of providers of broadband content. Greenlining
argues that the new company may prioritize network traffic of those companies to the detriment of other
content providers,
239
and it asks the Commission to “preserve net neutrality.”
240
New Jersey Rate Counsel
asks the Commission to revisit the applicability of its net neutrality rules to wireless providers.
241
The
Applicants respond that these requests have no nexus to the transactions and that to the extent the issue
warrants consideration, the Commission should do so in an industry-wide proceeding.
242
They also note
that net neutrality is the subject of an ongoing proceeding at the Commission.
243
81. We find that the record does not demonstrate that it is necessary or appropriate to revisit
open Internet issues or impose open Internet conditions in the context of the proposed transactions. As
the Applicants note, we have addressed issues concerning net neutrality in the context of a recent (and
still open) industry-wide proceeding,
244
and we see no reason to use this party-specific transaction to
modify the decisions that we have made there. Moreover, to the extent the parties are suggesting that we
impose conditions that require compliance with the requirements that we established in that proceeding,
we note that nothing in our decision today relieves the parties here from complying with those
requirements, and, consistent with Commission precedent, we conclude that such conditions are
unnecessary, as they only serve to require entities to comply with legal obligations that are already in
effect and fully enforceable.
245
82. Access charges. Some parties contend that Sprint has acted in bad faith in connection
with pre-existing billing disputes and debt obligations, and that therefore, the Commission should deny
237
See ¶¶ 52-53, 59-61 supra.
238
Greenlining Comments at 9; Greenlining Reply at 3-4.
239
Greenlining Comments at 9; Greenlining Reply at 3.
240
Greenlining Comments at 11.
241
NJ Rate Counsel Comments at 19-22.
242
Joint Opposition at 54.
243
Id.
244
See Preserving the Open Internet, Broadband Industry Practices, GN Docket No. 09-191, WC Docket No. 07-
52, Report and Order, 25 FCC Rcd 17905 (2010).
245
See, e.g., Verizon Communications, Inc. and America Móvil, S.A. de C.V., Application for Authority to Transfer
Control of Telecommunicaciones de Puerto Rico, WT Docket No. 07-43, Memorandum Opinion and Order and
Declaratory Ruling, 22 FCC Rcd 6195, 6208, ¶ 29 (2007) (“America Móvil Order”) (refusing to impose conditions
on a grant of application because “many requested conditions would simply require America Móvil to comply with
TELPRI's existing legal obligations. . . . América Móvil will be subject to those existing legal obligations as well as
other generally applicable regulatory requirements imposed on incumbent LECs.”); International Authorizations
Granted, Public Notice, 19 FCC Rcd 4079, 4080, ¶ 2 (2004) (stating that “Iridium Satellite, LLC's request to impose
a condition that the Applicants comply with the outcome of the BIG LEO Bands Rulemaking is unnecessary because
all Commission licensees must adhere to all applicable Commission rules and policies”); Application of Puerto Rico
Telephone Authority and GTE Holdings, LLC, Memorandum Opinion and Order, 14 FCC Rcd 3122, 3134, ¶ 28
(1999) (stating that the requested conditions are not necessary because they “would simply require PRTC to comply
with its existing legal obligations”).
Federal Communications Commission FCC 13-92
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the applications, or in the alternative, apply conditions to a grant of the applications. The Crow Creek
Sioux Tribe Utility Authority (Crow Creek Tribe Authority) contends that Sprint has not paid Crow
Creek’s Tribally-owned telecommunications carrier for switched access charges.
246
In 2010, Native
American Telecom, LLC (NAT), which is majority owned by the Crow Creek Sioux Tribe, filed a
complaint with the Crow Creek Tribe Authority arguing that shortly after NAT launched its Tribally-
owned telephone system, Sprint improperly refused to pay NAT’s switched access charges.
247
The Crow
Creek Tribe Authority asserts that, as a condition of the proposed transactions, the Commission should
enforce the order that requires Sprint to pay NAT for services rendered.
248
Moreover, Crow Creek
contends that the Commission should require Sprint to pay its debt for services provided by NAT because
of the Commission’s “red light” rule, which is a rule regarding applicants who are delinquent on debts
owed to the Commission.
249
Crow Creek argues that this rule is applicable because the federal
government has a federal trust relationship with Indian Tribes.
250
The Crow Creek Tribe Authority
requests that the Commission deny the transaction or, in the alternative, impose conditions to address
Crow Creek’s specific concerns.
251
83. nWire, LLC, Pac-West Telecomm, Inc., and Tex-Link Communications, Inc. (CLEC
Petitioners) jointly argue that Sprint has “engaged in self-help measures by unilaterally ceasing
intercarrier compensation payments owed to the CLEC Petitioners pursuant to federal law and federal and
state intercarrier compensation rules.”
252
They request that the Commission deny the applications or
impose conditions on the transaction to address their concerns.
253
84. Sprint argues that these on-going intercarrier compensation disputes lack merit and are
not transaction-specific, and therefore should not be relevant in this proceeding.
254
Sprint asserts that
CLEC Petitioners “do not even attempt to connect their conclusory allegations to the Transactions.”
255
Regarding the Crow Creek Tribe Authority’s use of the “red light” rule, Sprint contends that this rule
applies only if an applicant owes a debt to the Commission, and that the federal government’s trust
relationship with Indian Tribes does not allow an Indian Tribe to stand in the Commission’s shoes for
purposes of the “red light” rule.
256
246
Crow Creek Petition at 7-8.
247
Id. at 3, 7. Also in 2010, in the United States District Court for the Southern Division of South Dakota, Sprint
filed suit against NAT and NAT asserted counterclaims against Sprint. In 2012, the Court referred the case to the
Commission under the theory of primary jurisdiction. See Sprint v. Native American Telecom, No. CIV. 10-4110-
KES, 2012 WL 591674 (D.S.D. Feb. 22, 2012). This case is still pending.
248
Crow Creek Petition at 7-8.
249
Id. at 6-7. The “red light” rule precludes the Commission from acting on applications and other requests for
benefits when the applicant is delinquent on debts owed to the Commission. 47 C.F.R. § 1.1910.
250
Crow Creek Petition at 6-7.
251
Id. at 9.
252
CLEC Petitioners Petition at 1.
253
Id. at 2.
254
Joint Opposition at 41.
255
Id. at 44.
256
Id. at 43.
Federal Communications Commission FCC 13-92
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85. We agree with Sprint that these intercarrier compensation disputes are not merger
specific,
257
are based on arguments about prior conduct by Sprint, and are more appropriately resolved
through the contractual provisions between the parties or through the Commission’s complaint process
under section 208 of the Act.
258
As the Commission has repeatedly held, we will generally not impose
conditions to remedy pre-existing harms or harms that are unrelated to the transaction at issue.
259
Further,
we agree that the “red light” rule applies only where an applicant owes a debt to the Commission,
260
and
does not allow the Commission to deny the applications based upon claimed debts of Sprint to Crow
Creek pursuant to intercarrier arrangements.
86. Request by the Crow Creek Sioux Tribe to access spectrum. The Crow Creek Tribe
Authority also asserts that Sprint has not responded to an inquiry by the Crow Creek Sioux Tribe
regarding the availability of unused spectrum held by Sprint on the Crow Creek reservation.
261
According
to Crow Creek, Sprint holds a significant amount of spectrum on the Crow Creek reservation but does not
provide wireless coverage. The Crow Creek Tribe Authority asks the Commission to “require Sprint to
work cooperatively with the Crow Creek Sioux Tribe on its request for possible use of unused spectrum”
as a condition of approval of the SoftBank/Sprint transaction.
262
In response to the Crow Creek Tribe
Authority’s petition, the Applicants assert that the Commission has not required Sprint or other wireless
providers to make spectrum available to Indian Tribes.
263
257
See America Móvil Order, 22 FCC Rcd at 6206-07, ¶ 25 (rejecting assertions that a transfer of control should be
denied or conditioned based on non-merger-specific issues and finding that applicants were subject to existing
requirements). See AT&T-Centennial Order, 24 FCC Rcd at 13929, 13929, ¶ 30, 13974-75 ¶ 150 (citing Verizon
Wireless-ALLTEL Order, 23 FCC Rcd at 17463, ¶ 29); Sprint-Nextel-Clearwire Order, 23 FCC Rcd at 17582, ¶ 22;
Cingular-AT&T Wireless Order, 19 FCC Rcd at 21546, ¶ 43.
258
47 U.S.C. § 208.
259
See, e.g., Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17463, ¶ 29; Sprint Nextel-Clearwire Order, 23 FCC
Rcd at 17582, ¶ 22; Cingular-AT&T Wireless Order, 19 FCC Rcd at 21546, ¶ 43.
260
In 2004, the Commission adopted rules implementing the requirements of the Debt Collection Improvement Act
of 1996, Pub. L. No. 104-134, 110 Stat. 1321, 1358 (1996). See Amendment of Parts 0 and 1 of the Commission's
Rules, Report and Order, 19 FCC Rcd 6540 (2004). The “red light” rule requires the Commission to withhold action
on applications and other requests for benefits when the entity applying for or seeking benefits is delinquent in non-
tax debts owed to the Commission, and to dismiss such applications or other request if the delinquency is not
resolved; 47 C.F.R. § 1.1910 (“Action will be withheld on applications…by any entity found to be delinquent in its
debt to the Commission. . . .”) (emphasis added).
261
Crow Creek Petition at 8.
262
Id.; see also Oglala Sioux Tribe Reply at 1 (supporting the Crow Creek Petition). In a recent ex parte, the Crow
Creek Sioux Tribe and the Oglala Sioux Tribe request further conditions, which include requirements such as Sprint
agreeing in writing that they recognize Tribal sovereignty over the Tribal lands where Sprint operates, provides
service, or holds spectrum and Sprint filing annual reports with the Commission and the relevant Tribal authorities.
Letter from Barry W. Brandon, HvMKEN Consulting LLC, to Marlene H. Dortch, Secretary, FCC, dated June 18,
2013, at 3. See also generally Letter from Barry W. Brandon, HvMKEN Consulting LLC, to Marlene H. Dortch,
Secretary, FCC, dated June 27, 2013; Letter from Barry W. Brandon, HvMKEN Consulting LLC, to Marlene H.
Dortch, Secretary, FCC, dated June 25, 2013.
263
Joint Opposition at 43-44. The Applicants further maintain that the rulemaking proceeding regarding spectrum
on Tribal lands, that Crow Creek notes, merely seeks comment but does not impose any obligations on wireless
providers. See Joint Opposition at 44, n.139, referencing Improving Communications Services for Native Nations by
Promoting Greater Utilization of Spectrum over Tribal Lands, WT Docket No. 11-40, Notice of Proposed
Rulemaking, 26 FCC Rcd 2623 (2011) (“Tribal Lands NPRM”).
Federal Communications Commission FCC 13-92
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87. We recognize the importance of the issues raised by the Crow Creek Tribe Authority
regarding spectrum access. Indeed, as the Crow Creek Tribe Authority notes in its petition, the
Commission has an open rulemaking proceeding that seeks comment on potential methods to facilitate
greater Tribal access to spectrum over Tribal lands.
264
These issues are not specific to the transactions
before us, though, and are better addressed in the context of this rulemaking proceeding.
88. Miscellaneous issues. Other commenters request that the Commission take a variety of
additional measures with respect to the transactions. In particular, Taran asserts that the loss of Clearwire
to Sprint would be a detriment to preserving Clearwire’s unique microwave backhaul network.
265
The
New Jersey Rate Counsel asks the Commission to open a proceeding to establish “regular, uniform, and
comprehensive data reporting collections” by the wireless industry regarding rates, terms, and
conditions,
266
and to require Sprint to comply with the guidelines for addressing “bill shock” in CTIA’s
Consumer Code for Wireless Services.
267
89. The Applicants respond that these requests are meritless or not specifically related to the
transactions.
268
They also note that bill shock is the subject of an ongoing proceeding at the
Commission.
269
With respect to backhaul, they assert that Clearwire does not currently offer wholesale
backhaul and that Taran offers no explanation why Sprint would have any less incentive to provide such
services after it acquires de facto control of Clearwire.
270
90. We find that these claims are not transaction-specific, and we decline to grant the
requested relief. Further, as the Applicants note, the claim regarding bill shock pertains to an industry-
wide issue that has been raised in a broader context.
271
In addition, we note that the Applicants indicate
that both Sprint and Clearwire voluntarily support CTIA’s Consumer Code for Wireless Services.
272
VI. POTENTIAL PUBLIC INTEREST BENEFITS
91. After assessing the potential competitive harms of the proposed transactions, we next
consider whether the proposed assignment of the licenses is likely to generate verifiable, transaction-
264
See generally Tribal Lands NPRM.
265
Taran Petition at 5. Taran asserts that Clearwire’s microwave backhaul network is “the only wireless,
independent, urban backhaul network with redundant, and potentially gigabit capacity links in major urban centers.”
Id.
266
NJ Rate Counsel Comments at 22-23.
267
Id. at 25-26.
268
Joint Opposition at 53.
269
Id. at 54.
270
Id. at 52.
271
See FCC Chairman Julius Genachowski Announces Major Progress in Usage-based Alert Program to Protect
Mobile Customers from ‘Bill Shock’; Wireless Carriers Meet and Beat Deadline to Provide Free Data, Voice, Text,
& International Alerts, News Release, Federal Communications Commission, October 17, 2012; see also Sixteenth
Annual Competition Report, 28 FCC Rcd at 3903-04, ¶¶ 313-14 (describing steps taken by Commission and wireless
providers to address bill shock).
272
Joint Opposition at 54, n.169.
Federal Communications Commission FCC 13-92
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specific public interest benefits that outweigh any identified competitive harms.
273
As discussed below,
we anticipate that the proposed transactions likely will facilitate certain transaction-specific public interest
benefits, the acceleration of advanced mobile broadband services and enhanced competition in the mobile
wireless market. As we have concluded above, the potential public interest harms presented by these
transactions are not likely, and thus, using our sliding scale approach, we can accept a lower showing to
recognize the potential public interest benefits of these transactions. We reach our conclusion regarding
public interest benefits recognizing that it is difficult for us to precisely quantify either the magnitude of
or the time period in which these benefits will be realized.
274
A. Analytical Framework
92. The Commission has recognized that “[e]fficiencies generated through a merger can
mitigate competitive harms if such efficiencies enhance the merged firm’s ability and incentive to
compete and therefore result in lower prices, improved quality of service, enhanced service or new
products.”
275
This same analysis applies to an acquisition of assets like that contemplated by the proposed
transactions before us. Under Commission precedent, the Applicants bear the burden of demonstrating
that the potential public interest benefits of the proposed transaction outweigh the potential public interest
harms.
276
93. The Commission applies several criteria in deciding whether a claimed benefit should be
considered and weighed against potential harms.
277
First, the claimed benefit must be transaction-
specific. Second, the claimed benefit must be verifiable. Because much of the information relating to the
potential benefits of a transaction is in the sole possession of the applicants, they are required to provide
sufficient evidence supporting each claimed benefit so that the Commission can verify its likelihood and
magnitude. In addition, “the magnitude of benefits must be calculated net of the cost of achieving
them.”
278
Finally, the Commission applies a “sliding scale approach” to evaluating benefit claims.
279
Under this sliding scale approach, where potential harms appear “both substantial and likely, a
demonstration of claimed benefits also must reveal a higher degree of magnitude and likelihood than we
273
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 40; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10734, ¶ 95; AT&T-Qualcomm Order, 26 FCC Rcd at 17622-23, ¶ 81; Cingular-AT&T Wireless Order, 19 FCC Rcd
at 21599, ¶ 201.
274
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 40; AT&T-Qualcomm Order, 26 FCC Rcd at 17623, ¶ 82;
AT&T-Verizon Wireless-ALLTEL Order, 25 FCC Rcd at 8736, ¶ 73.
275
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 41; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10734, ¶ 96; AT&T-Qualcomm Order, 26 FCC Rcd at 17623, ¶ 83; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21599, ¶ 204.
276
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10734, ¶ 96; AT&T-Qualcomm Order, 26 FCC Rcd at 17623, ¶ 83; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21599, ¶ 204.
277
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10734, ¶ 97; AT&T-Qualcomm Order, 26 FCC Rcd at 17623, ¶ 84; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21600, ¶ 205.
278
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16475, ¶ 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735, ¶ 97; AT&T-Qualcomm Order, 26 FCC Rcd at 17624, ¶ 84; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21600, ¶¶ 205-06.
279
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735, ¶ 98; AT&T-Qualcomm Order, 26 FCC Rcd at 17624, ¶ 85; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21600, ¶ 206.
Federal Communications Commission FCC 13-92
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would otherwise demand.”
280
Conversely, where potential harms appear unlikely, as is the case here, or
less likely and less substantial, we will accept a lesser showing.
281
B. Asserted Benefits
94. Broadband Deployment. The Applicants claim, in their Public Interest Statement, that
the transaction would result in an $8 billion investment in Sprint resulting in a stronger competitor
benefiting consumers.
282
Specifically, the Applicants assert that this investment by SoftBank would make
Sprint a more effective competitor to Verizon Wireless and AT&T.
283
According to the Applicants, Sprint
would be able to use the capital infusion to invest in its network and improve mobile broadband service to
its customers to an extent it otherwise may not be able to because it has incurred substantial
indebtedness.
284
They also contend that Sprint would be able to accelerate its deployment of LTE by
expanding its network to include various spectrum bands in additional markets.
285
Further, the Applicants
note SoftBank’s record in Japan of network upgrades to improve coverage and capacity, including small
cell deployment, Wi-Fi hotspots, femtocells and in-building repeater systems.
286
95. Moreover, the Applicants assert that the proposed transactions would provide financial
resources to transition Clearwire’s network to LTE and improve wireless broadband service to
consumers.
287
According to the Applicants, Clearwire has faced several financial challenges including
record net losses and indebtedness, and these challenges have hampered Clearwire’s transition of its
network from WiMAX to LTE.
288
The Applicants claim that in the short-term, Sprint has agreed to
provide Clearwire with additional financing and that part of SoftBank’s capital infusion to Sprint would
be used to increase investment in the Clearwire network.
289
In addition, the Applicants assert that the
utility of Clearwire’s 2.5 GHz spectrum is enhanced by combining it with Sprint’s complimentary core
280
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 42; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at
10735, ¶ 98; AT&T-Qualcomm Order, 26 FCC Rcd at 17624, ¶ 85; Cingular-AT&T Wireless Order, 19 FCC Rcd at
21600, ¶ 206; cf. 2010 DOJ/FTC Horizontal Merger Guidelines at § 10, p. 31 (“The greater the potential adverse
competitive effect of a merger . . . the greater must be cognizable efficiencies in order for the Agency to conclude
that the merger will not have an anticompetitive effect in the relevant market. When the potential adverse
competitive effect of a merger is likely to be particularly large, extraordinarily great cognizable efficiencies would
be necessary to prevent the merger from being anticompetitive.”).
281
See, e.g., AT&T-WCS Order, 27 FCC Rcd at 16459, ¶ 42; AT&T-Qualcomm Order, 26 FCC Rcd at 17624, ¶ 85;
AT&T-Verizon Wireless Order, 25 FCC Rcd at 8737, ¶ 76; Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17497,
¶ 118; Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17616, ¶ 117.
282
Public Interest Statement at 23-24. See ¶ 102 infra (amendment to merger agreement reducing the investment).
283
Public Interest Statement at 13-14, 21-22.
284
Id. at 23-24; Joint Opposition at 2.
285
Public Interest Statement at 25.
286
Id. at 18-19.
287
Amendment at 4-6. Letter from Vonya B. McCann, Senior Vice President, Government Affairs, Sprint Nextel,
to Marlene H. Dortch, Secretary, FCC, dated Mar. 18, 2013 (“Applicants Mar. 18, 2013 Ex Parte”). In addition, the
Applicants assert that the proposed transaction would eliminate any uncertainty or inefficiencies created by
Clearwire’s current ownership structure and would result in a more efficient, integrated company than if Clearwire
operated as a separate company. Amendment at 6.
288
Amendment at 4-5.
289
Id. at 5.
Federal Communications Commission FCC 13-92
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coverage using 1.9 GHz spectrum and enhanced geographic coverage using 800 MHz spectrum.
290
The
Applicants also maintain that Clearwire would benefit from SoftBank’s resources and expertise.
291
96. The New Jersey Rate Counsel requests that the Applicants commit to specific milestones
and/or a timetable for the proposed investment in Sprint’s network and, more specifically, commit to the
deployment of its LTE network, with specific time frames associated with this commitment.
292
The
Applicants state that, in fact, $3.1 billion of this amount already has been provided in the form of a
convertible bond, and SoftBank is contractually committed to providing the remaining amount when the
SoftBank/Sprint transaction closes. The Applicants argue that it is unnecessary for the Commission to
seek any additional commitments or to establish a timetable for the investment, as Softbank already has
provided $3.1 billion to Sprint in the form of a convertible bond and will be contractually obligated to
provide any remaining amount when the SoftBank/Sprint transaction closes.
293
97. The New Jersey Rate Counsel and the MMTC set forth requests regarding low income
and minority consumers. The New Jersey Rate Counsel argues that the Applicants would enhance the
public interest by committing to a program similar to Comcast’s Essentials program, which provides
discounted broadband service and computers to low income consumers.
294
MMTC requests that the
Commission ask for additional information on how the transaction would, among other things, increase
broadband access to underserved and unserved areas and expand opportunities for women and minorities
in the field of communications.
295
DISH also contends that the Applicants should submit plans to provide
service to unserved and underserved rural areas.
296
98. On June 10, 2013, the Applicants amended their merger agreement. As part of the
amended merger agreement, SoftBank reallocated $3 billion of SoftBank’s previously planned direct
investment in Sprint, reducing that investment from $8 billion to $5 billion.
297
As modified, the aggregate
cash consideration payable to Sprint’s stockholders would increase by $4.5 billion.
298
The Applicants
290
Id. at 6.
291
Id. See supra ¶ 17 (discussing the benefits of SoftBank’s expertise).
292
NJ Rate Counsel Reply at 4-5, 7; NJ Rate Counsel Comments at ii-iii, 16-17.
293
Joint Opposition at 11; Amendment at 5.
294
NJ Rate Counsel Comments at 26-28; NJ Rate Counsel Reply at 5-6.
295
MMTC May 28, 2013 Ex Parte at 4-5. See also Letter from David Honig, President, MMTC, to Marlene H.
Dortch, Secretary, FCC, dated June 6, 2013, at 3; Letter from David Honig, President, MMTC, to Marlene H.
Dortch, Secretary, FCC, dated June 4, 2013, at 2-3; Letter from David Honig, President, MMTC, to Chairwoman
Mignon Clyburn, FCC, dated June 19, 2013, at 1-2; MVNO Association June 12, 2013 Ex Parte at 1 (supporting
MMTC’s concerns about the effect of the proposed transactions on access of underserved communities to wireless
services). Concerning the ex parte letter filed by the MMTC, Sprint argues that this filing is untimely and therefore
a violation of the Commission’s rules because the MMTC raises issues that should have been raised at the time of
the initial pleadings. Sprint May 30, 2013 Ex Parte at 2-3.
296
DISH May 30, 2013 Ex Parte at 2; DISH May 23, 2013 Ex Parte at 2; DISH May 13, 2013 Ex Parte at 2; DISH
May 7, 2013 Ex Parte at 2. In addition, in response to MMTC’s requests for more information regarding diversity
concerns, DISH filed a letter answering MMTC’s questions. See generally Letter from Jeffrey H. Blum, Senior
Vice President and Deputy General Counsel, DISH, to Marlene H. Dortch, Secretary, FCC, dated June 11, 2013
(“DISH June 11, 2013 Ex Parte”).
297
Applicants June 11, 2013 Ex Parte at 1, Attachment at 1. See ¶ 12 supra. See also Public Interest Statement at
1-2, 13-14, 21-22; Applicants Mar. 12, 2013 Ex Parte at 2.
298
Applicants June 11, 2013 Ex Parte at 1, Attachment at 1.
Federal Communications Commission FCC 13-92
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assert that “the reallocation of primary capital to Sprint stockholders is warranted given the companies’
refined operating and capital expenditure synergy expectations resulting from extensive due diligence
over the past nine months, as well as Sprint’s improving profitability and execution of its Network Vision
plan.”
299
99. DISH filed an ex parte letter in response to the Applicants’ announcement of the
amended merger agreement.
300
DISH contends that the reduction of the capital infusion means that there
will be less capital available to Sprint for network investment and broadband deployment.
301
DISH
asserts that in the Public Interest Statement, the Applicants relied on the large capital infusion to support
their statements regarding the public interest benefits of the transaction and the Applicants should
therefore provide the Commission with a new public interest analysis with an explanation of the benefits
of the transaction.
302
100. In response to DISH’s arguments regarding the amendment, the Applicants assert that
they have already provided the Commission with a full description of the changes to the proposed
transaction and an analysis of the “minimal impact” of those changes on the public interest benefits of the
transaction.
303
The Applicants maintain that the transaction offers many benefits in addition to
SoftBank’s financial investment, including giving Sprint access to SoftBank’s technical expertise,
particularly in deployment of TDD-LTE; allowing Sprint to benefit from SoftBank’s experience in
tailoring service plans and devices to meet consumer needs; and increased scale economies and improved
access to new technology.
304
The Applicants argue that SoftBank’s $5 billion investment gives Sprint a
substantially stronger balance sheet and greater resources for deploying network assets than it had
previously.
305
According to the Applicants, all of the other public interest benefits identified by Sprint
and SoftBank are largely unaffected by the changes to the merger agreement.
306
101. Innovation in Services, Plans, Devices, and Applications. According to the Applicants, a
combined SoftBank and Sprint would provide economies of scale in device and mobile application
development and therefore would increase innovation and competition in these areas.
307
Further, the
Applicants assert that SoftBank implemented innovative approaches in Japan’s mobile
telecommunications marketplace, including lowering prices, deploying extensive network and
infrastructure upgrades, and providing new and innovative devices.
308
The Applicants claim that Sprint
299
Id. at Attachment at 1-2.
300
See generally DISH June 12, 2013 Ex Parte. See also generally Letter from Pantelis Michalopoulos, Counsel for
DISH, to Marlene H. Dortch, Secretary, FCC, dated June 14, 2013 (“DISH June 14, 2013 Ex Parte”).
301
DISH June 12, 2013 Ex Parte at 2.
302
Id. at 1-3. See also DISH June 14, 2013 Ex Parte at 2-5.
303
Applicants June 13, 2013 Ex Parte at 1.
304
Id. at 1-2.
305
Id. at 2.
306
Id.
307
Public Interest Statement at 27-29; Joint Opposition at 3.
308
Public Interest Statement at 2, 14-21; Joint Opposition at 3. The Applicants claim that SoftBank implemented
various pricing innovations, including allowing customers to purchase handsets on installment plans and initiating
free mobile-to-mobile daytime calling between SoftBank customers and a discounted student plan. Public Interest
Statement at 16-18. The Applicants also contend that SoftBank introduced new Internet content and made this new
content easily available to users. Id. at 19-20.
Federal Communications Commission FCC 13-92
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would be able to take advantage of SoftBank’s expertise in these areas to potentially offer new and
innovative products and services and to use various techniques to boost its network performance
benefiting consumers.
309
DISH argues that it is not clear whether SoftBank will be able to achieve the
same success in the United States that it achieved in Japan, where SoftBank served a concentrated urban
population and had had a first-mover advantage with the iPhone.
310
C. Discussion
102. We anticipate that the proposed transactions likely will result in key public interest
benefits. In particular, Softbank’s provision of greater resources for transitioning the existing networks of
Sprint and Clearwire to LTE technology could accelerate Sprint’s rollout of advanced mobile broadband
services, thereby supporting our goal of expanding mobile broadband deployment throughout the country.
In addition, we anticipate that the proposed transactions likely will strengthen Sprint’s ability to compete
in the wireless marketplace, potentially resulting in greater innovation and reduced prices for all
consumers, including rural, low-income, and minority consumers. While we acknowledge that under the
revised Merger Agreement SoftBank would be making an initial investment in Sprint of $3 billion less
than it originally asserted, we anticipate that the $5 billion initial investment that SoftBank is making,
along with other asserted benefits such as economies of scale in acquiring devices, will likely result in
public interest benefits. We also note that, under the Commission’s sliding scale approach, where
potential public interest harms appear unlikely, as is the case here, we will accept a lesser showing of
public interest benefits. Accordingly, based on the record before us and the Applicants’ descriptions
discussed above, we find that the proposed transactions likely will result in certain public interest benefits
that support the approval of the proposed transactions.
VII. FOREIGN OWNERSHIP AND PETITION FOR DECLARATORY RULING
103. The Applicants and Starburst I (together, for purposes of our foreign ownership analysis,
the “310(b)(4) Petitioners”) ask the Commission for a declaratory ruling that it would serve the public
interest to allow SoftBank, upon closing, to indirectly hold, through Starburst I, foreign ownership and
voting rights in Sprint and its direct and indirect licensee subsidiaries (Licensee Subsidiaries) in excess of
the 25 percent foreign ownership benchmark under section 310(b)(4) of the Act.
311
Specifically, the
310(b)(4) Petitioners request a declaratory ruling allowing up to 100 percent aggregate foreign ownership
in Sprint and its Licensee Subsidiaries upon consummation of the proposed transactions, consisting of:
(1) indirect foreign ownership interests derived from the approximately 78 percent indirect interest that
SoftBank will acquire in Sprint, (2) the foreign interests derived from the approximately 22 percent
interest in Sprint to be held by various former Sprint shareholders,
312
and (3) an additional 25 percent
aggregate equity and/or voting interest from foreign investors that could be accepted without seeking
309
Public Interest Statement at 26-27. See also Applicants Mar. 18, 2013 Ex Parte at 1.
310
DISH Reply at 24-25.
311
Petition at 1-2 and Attachment A (listing the relevant Licensee Subsidiaries covered by the Petition). See IBFS
File No. ISP-PDR-20121115-00007. The 310(b)(4) Petitioners state that although the proposed transactions include
the transfer to SoftBank of Sprint’s interest in Clearwire, Clearwire is not implicated in the Petition because
Clearwire does not hold common carrier, broadcast, aeronautical en route, or aeronautical fixed radio station
licenses and thus is not subject to the foreign ownership restrictions of section 310(b) of the Act. Petition at 3; see
Applicants March 12, 2013 Letter; Clearwire Apr. 4, 2013 Ex Parte at 1.
312
Applicants June 11, 2013 Ex Parte. The Applicants state that after all the elements of the transactions are
completed, it is anticipated that SoftBank will hold approximately 77.667 percent of Sprint. The Applicants further
state that this percentage may change in light of potential adjustments under the terms of the Merger Agreement, so
the final percentage may be as high as 78 percent. Id. at 2, n.5.
Federal Communications Commission FCC 13-92
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prior Commission approval under section 310(b)(4), subject to the standard conditions that no more than
25 percent of Sprint’s total ownership is attributable to individuals or entities from countries that are not
Members of the World Trade Organization (“WTO”), and/or that no more than 25 percent is attributable
to a single previously unidentified individual or entity from a WTO Member country.
313
104. We analyze below the ownership information provided by the 310(b)(4) Petitioners under
section 310(b)(4) of the Act and pursuant to our foreign ownership policies set forth in the Foreign
Participation Order.
314
We also discuss the filings submitted by various parties regarding the proposed
foreign ownership of Sprint and its Licensee Subsidiaries. Based on the record before us, we conclude
that it would serve the public interest to allow the foreign ownership of post-transaction Sprint and its
Licensee Subsidiaries.
A. Review of Foreign Ownership of Common Carrier Wireless Licenses
105. Background. Section 310(b)(4) of the Act establishes a 25 percent benchmark for
investment by foreign individuals, governments, and corporations in U.S.-organized entities that directly
or indirectly control U.S. common carrier wireless licensees.
315
This section of the Act also grants the
Commission discretion to allow higher levels of foreign ownership in a licensee’s controlling U.S.-
organized parent unless the Commission finds that the public interest will be served by refusing to permit
such foreign ownership.
316
The presence of aggregated alien equity or voting interests in a common
carrier licensee’s controlling U.S-organized parent in excess of 25 percent triggers the applicability of
section 310(b)(4)’s statutory benchmark.
317
Once the benchmark is triggered, section 310(b)(4) directs
the Commission to determine whether the “public interest will be served by the refusal or revocation of
such license.”
318
106. In the Foreign Participation Order, the Commission concluded that the public interest
would be served by permitting greater investment by individuals or entities from WTO Member countries
in U.S. common carrier and aeronautical fixed and aeronautical en route radio licensees.
319
Therefore,
with respect to indirect foreign investment from WTO Member countries, the Commission adopted a
313
See Petition at i, 17. The 310(b)(4) Petitioners request this margin to accommodate fluctuations in ownership in
publicly traded shares of Starburst II’s stock. Petition at n.36. As noted above, Starburst II would be renamed
Sprint Corporation after consummation of the merger. Public Interest Statement at 7.
314
47 U.S.C. § 310(b)(4). Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB
Docket Nos. 97-142 and 95-22, Report and Order and Order on Reconsideration, 12 FCC Rcd 23891, 23896, ¶ 9,
23913, ¶ 50, 23940, ¶¶ 111-112 (1997) (“Foreign Participation Order”), Order on Reconsideration, 15 FCC Rcd
18158 (2000). The Petitioners submitted supplemental information regarding shareholders of Sprint and SoftBank.
Letter from J.G. Harrington, counsel for SoftBank and Regina M. Keeney, counsel for Sprint Nextel, to James L.
Ball, Chief, Policy Division, International Bureau, FCC, dated Feb. 27, 2013 (“Applicants Feb. 27, 2013 Ex Parte”);
Letter from Regina M. Keeney, Lawler, Metzger, Keeney & Logan, LLC, counsel for Sprint Nextel Corporation, to
Marlene H. Dortch, Secretary, FCC, dated Apr. 4, 2013 (“Sprint Apr. 4, 2013 Ex Parte”) (attaching Apr. 4, 2013
U.S. Shareholder Analysis conducted by K&L Gates for Sprint Nextel Corporation, the “K&L Gates Analysis”);
Letter from J.G. Harrington, counsel for SoftBank Corp., to James L. Ball, Chief, Policy Division, International
Bureau, FCC, dated Apr. 8 2013 (“SoftBank Apr. 8, 2013 Ex Parte”); Applicants June 11, 2013 Ex Parte.
315
47 U.S.C. § 310(b)(4).
316
Id.
317
See Applications of BBC License Subsidiary L.P. (Assignor) and SF Honolulu Subsidiary, Inc. (Assignee), et al.,
Memorandum Opinion and Order, 10 FCC Rcd 10968, 10973-74, ¶ 25 (1995).
318
47 U.S.C. § 310(b)(4).
319
Foreign Participation Order, 12 FCC Rcd at 23896, ¶ 9, 23913, ¶ 50, 23940, ¶¶ 111-112.
Federal Communications Commission FCC 13-92
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rebuttable presumption that such investment generally raises no competitive concerns.
320
With respect to
foreign investment from countries that are not WTO Members, the Commission stated in the Foreign
Participation Order that it would deny an application if it found that more than 25 percent of the
ownership of an entity that controls a common carrier radio licensee is attributable to parties whose
principal place(s) of business are in non-WTO Member countries that do not offer effective competitive
opportunities to U.S. investors in the particular service sector in which the applicant seeks to compete in
the U.S. market, unless other public interest considerations outweigh that finding.
321
The Commission’s
public interest analysis under section 310(b)(4) also considers any national security, law enforcement,
foreign policy, or trade policy concerns raised by the proposed foreign investment.
322
107. Comments. The EBS Petitioners ask us to deny the proposed transaction because, inter
alia, it would permit the single largest transfer of U.S. spectrum assets – including spectrum exclusively
allocated to educational institutions – to foreign control.
323
The EBS Petitioners argue that the potential
transfer of U.S. educational spectrum to foreign control is an “exceptional circumstance” that requires us
to perform a detailed public interest analysis and does not allow for a presumption in favor of SoftBank’s
entry in the U.S. telecommunications market.
324
The EBS Petitioners request that we deny the
Applications or condition any approval on Clearwire divesting all its EBS spectrum leases and holdings to
U.S. controlled entities in order to ensure that EBS continues to benefit U.S. educational, non-profit and
religious institutions, and their constituents, communities and governing bodies.
325
108. DISH questions whether the presumption in favor of foreign entities from WTO Member
countries investing in the U.S. telecommunications industry applies in this case to the extent that
Applicants have used, or plan to use, licenses that are subject to the statutory alien ownership restriction
for broadcast-type services.
326
DISH states that the spectrum held by the Applicants is suitable for the
provision of such services and that under the Commission’s flexible use policy, the wireless frequencies
320
Id. at 23913, ¶ 50, 23940, ¶¶ 111-112. The Commission stated that the presumption in favor of entry by an
applicant from a WTO country could be rebutted only in “exceptional circumstances” where it can be shown that the
entry raises a “very high risk” to competition in the U.S. market. Id. at 23913-14, ¶¶ 50-51.
321
Id. at 23946, ¶ 131. The Commission recently determined to eliminate the distinction between foreign
investment from WTO Member countries and non-WTO Member countries, and instead apply an “open entry”
standard in its public interest assessment of all foreign investment under the section 310(b)(3) forbearance approach
adopted in the Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees under
Section 310(b)(4) of the Communications Act of 1934, as Amended, IB Docket No. 11-133, First Report and Order,
27 FCC Rcd 9832, 9844, ¶ 33 (2012), and under the Commission’s section 310(b)(4) review. Review of Foreign
Ownership Policies for Common Carrier and Aeronautical Radio Licensees under Section 310(b)(4) of the
Communications Act of 1934, as Amended, IB Docket No. 11-133, Second Report and Order, FCC 13-50, 28 FCC
Rcd 5741, 5745, ¶ 5, 5754-58, ¶¶ 20-27 (2013) (“Foreign Ownership Policies Second Report and Order”). Those
rules have not taken effect yet, however.
322
Id. at 23913-15, ¶¶ 59-66. In assessing the public interest, the Commission takes into account the record
developed in each particular case and accords deference to Executive Branch agencies on issues related to national
security, law enforcement, foreign policy and trade policy. Id. at 23918, ¶ 59, 23919, ¶¶ 61-66.
323
EBS Petitioners Petition at 3-5.
324
EBS Petitioners Reply at iv-v, 26.
325
EBS Petitioners Petition at 1, 16-17.
326
DISH Reply at 2-3, 8-9.
Federal Communications Commission FCC 13-92
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at issue here can be used for various services including point-to-multipoint services.
327
DISH also
contends that the Applicants have not shown that Japan affords effective competitive opportunities for
broadcast-type services.
328
To the extent the presumption applies, DISH argues that it would be rebutted
by the exceptional circumstances present in this case, e.g., the amount of spectrum being aggregated,
SoftBank’s plan to use the spectrum, the “unproven” public interest benefits from the transaction, and
“the windfall that SoftBank would enjoy if Sprint still owes the U.S. Treasury an anti-windfall
payment.”
329
DISH also raises foreign ownership concerns regarding SoftBank’s alleged interactions
with banks to impede DISH’s ability to secure credit and the applicability of certain legal restrictions to
foreign companies (as opposed to U.S. companies).
330
109. In response, the 310(b)(4) Petitioners state that section 310(b) of the Act imposes no
foreign ownership limitation on Clearwire’s spectrum licenses, which are operated on a non-common
carrier basis, and that the combined foreign ownership of the 310(b)(4) Petitioners otherwise complies
with the Commission’s policies and precedent.
331
The 310(b)(4) Petitioners also dispute the contention
that the SoftBank/Sprint transaction should be subject to additional scrutiny because “broadcast-type
services” might be offered via the spectrum acquired in the proposed transaction. The 310(b)(4)
Petitioners state the broadcast-specific foreign ownership limitations of section 310(b) apply only to
actual broadcast services, and the 310(b)(4) Petitioners do not provide broadcast services.
332
They also
contend that arguments raised by DISH and other parties are not relevant to this proceeding and do not
warrant further Commission consideration.
333
110. Other parties generally support the proposed foreign ownership in this case. For
example, the Computer & Communications Industry Association states that SoftBank’s proposed foreign
investment will accelerate and expand wireless broadband deployment in the United States.
334
NACEPF
believes the EBS Petitioners’ assertion of harm to EBS licensees if foreign ownership is approved is
premature and unsupported.
335
The HITN states that fears of foreign control are misplaced and that the
change in control will “facilitate construction of stations and further secure the educational objectives
underlying the EBS spectrum.”
336
The EBS Licensees argue that SoftBank’s entry in the U.S. market
may be a “key ingredient” in furthering the potential of EBS spectrum.
337
The Association for Continuing
Education notes that each EBS licensee is in the best position to consider and address any issues that
327
DISH Reply at 9. DISH contends that LTE enables broadcast-type services, through the use of Evolved
Multimedia Broadcast Services and that Sprint’s current offerings include Sprint TV, which appears to be a
broadcast-type or subscription television service. Id.
328
DISH Reply at 9.
329
Id. at 3-6, 10-32.
330
DISH May 16, 2013 Ex Parte at 3.
331
Joint Opposition at 19-22.
332
Applicants Mar. 12, 2013 Ex Parte at 3 (“The Applicants do not disseminate radio communications on a non-
subscription basis to the general public.”).
333
See, e.g., SoftBank May 23, 2013 Ex Parte.
334
Letter from Computer & Communications Industry Association (CCIA) to Marlene H. Dortch, Secretary, FCC,
dated Feb. 12, 2013, at 2.
335
NACEPF Opposition at 6-7.
336
HITN Opposition at 6-7.
337
EBS Licensees, Comments on Petition to Deny at 7-9, dated Feb. 12, 2013.
Federal Communications Commission FCC 13-92
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might arise out of the transfer of indirect control to a foreign corporation of the contractual right to use
leased EBS capacity.
338
111. Discussion. We are not persuaded by the EBS Petitioners’ assertion that the proposed
indirect foreign ownership of Clearwire’s licenses and lease rights constitutes an “exceptional
circumstance” that would rebut the presumption that SoftBank’s entry in the U.S. telecommunications
market raises no competitive concerns. As an initial matter, the presumption the Commission adopted in
the Foreign Participation Order is only relevant to the Commission’s analysis of foreign ownership of
common carrier and certain aeronautical licensees under section 310(b)(4) of the Act, and not other types
of licenses. The statutory limitations on foreign ownership in section 310(b) of the Act do not apply to
non-common carrier radio licenses like those held by Clearwire,
339
and we find no merit to the contention
that public interest harms would arise from the proposed transactions.
340
Moreover, we agree with the
310(b)(4) Petitioners that – given SoftBank’s investment in Sprint – SoftBank has the incentive and
capability to improve existing services and deploy new services that would benefit the public.
341
As we
stated above, we anticipate that the proposed transactions likely would facilitate certain transaction-
specific public interest benefits, including the acceleration of advanced mobile broadband services and
enhanced competition in the mobile wireless market, and the potential public interest harms presented by
these transactions are not likely.
342
For these and the other reasons discussed herein, we deny the EBS
Petitioners’ challenge.
343
112. We are similarly not persuaded by DISH’s assertion that the presumption the
Commission affords foreign investors from WTO Member countries entering the U.S.
telecommunications market is inapplicable here because the radio licenses being transferred may be used
to provide “broadcast-type services.”
344
As we noted above, the presumption the Commission adopted in
the Foreign Participation Order is only relevant to the Commission’s analysis of foreign ownership of
common carrier and certain aeronautical licensees under section 310(b)(4) of the Act, and not other types
of licenses. In this case, the 310(b)(4) Petitioners are seeking a declaratory ruling under section 310(b)(4)
for approval of the indirect foreign ownership of the Licensee Subsidiaries that hold common carrier
licenses. Additionally, the 310(b)(4) Petitioners state that the services they provide are non-broadcast.
345
338
32 EBS Parties Opposition at 6.
339
47 U.S.C. § 310(b); see Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio
Licensees under Section 310(b)(4) of the Communications Act, as Amended, IB Docket No. 11-133, Notice of
Proposed Rulemaking, FCC 11-121, 26 FCC Rcd 11703, 11708-10, ¶¶ 7-11 (2011) (presenting a general overview
of foreign ownership restrictions under section 310 of the Act).
340
See Section V supra.
341
See Joint Opposition at 22.
342
See Sections V-VI supra.
343
See Section V supra. With regard to the general concerns raised by the EBS Petitioners regarding the foreign
ownership of Sprint and its Licensee Subsidiaries in this case, see ¶ 107 supra, as we explain below, we find such
foreign ownership to be in the public interest.
344
DISH Reply at 9 (citing Amendment of the Commission’s Regulatory Policies to Allow Non-U.S.-Licensed Space
Stations to Provide Domestic and International Satellite Service in the United States, IB Docket No. 96-111, Report
and Order, 12 FCC Rcd 24094 at 24137, ¶ 99, on reconsideration, First Order on Reconsideration, 15 FCC Rcd
7207 (1999); Reform of Rules and Policies on Foreign Carrier Entry into the U.S. Telecommunications Market, IB
Docket No. 12-299, Notice of Proposed Rulemaking, 27 FCC Rcd 12765 (2012).
345
Applicants Mar. 12, 2013 Ex Parte at 3.
Federal Communications Commission FCC 13-92
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Because the licenses at issue here are common carrier licenses, the presumption afforded foreign investors
from WTO Member countries entering the U.S. telecommunications market pursuant to the policies set
forth in our Foreign Participation Order would apply. With regard to DISH’s requests that we evaluate
whether Japan offers effective competitive opportunities to U.S. companies for broadcast-type services
(an evaluation akin to the Effective Competitive Opportunities test used in other contexts), we do not find
it necessary to conduct such an evaluation because section 310(b) applies specifically to common carrier,
broadcast, aeronautical en route and aeronautical fixed radio station licenses, and not to “broadcast-type
services.”
346
We are also not persuaded by DISH’s contention that SoftBank’s alleged actions to threaten
banks – as discussed above in Section IV – constitute anticompetitive conduct in “[t]he global financial
markets” that is relevant to our foreign ownership analysis. As we stated above, we find these allegations
to be speculative as they are based on press reports of actions that SoftBank “may have taken.”
347
We
also find DISH’s argument that SoftBank is subject to fewer restrictions – such as banking-related
restrictions set forth in 12 U.S.C. §§ 1842(c)(5), 1843 – than a U.S. company
348
not relevant to this
proceeding.
349
113. Having addressed the foreign ownership concerns raised by the various parties and
determined the presumption afforded foreign investors from WTO Member countries entering the U.S.
telecommunications market applies to the common carrier licenses that would be transferred in this case,
we now analyze the attributable indirect foreign ownership interests in the Licensee Subsidiaries pursuant
to the policies adopted in the Foreign Participation Order. The purpose of this analysis is to determine
whether at least 75 percent of the equity and voting interests that would be held indirectly in the Licensee
Subsidiaries upon closing are properly ascribed to individuals or entities that are citizens of, or that
principally conduct business in, WTO Member countries for purposes of our public interest analysis
under section 310(b)(4) of the Act and the policies adopted in the Foreign Participation Order.
B. Attributable Foreign Ownership Interests
114. SoftBank Foreign Ownership. SoftBank is a publicly traded company organized under
the laws of Japan, a WTO Member country.
350
It is traded on the Tokyo Stock Exchange (First
Section)
351
with a single class of common stock that is widely dispersed. It has 1,098,514,819 shares
346
47 U.S.C. § 310(b). See Comprehensive Review of Licensing and Operating Rules for Satellite Services, IB
Docket No. 12-267, Notice of Proposed Rulemaking, 27 FCC Rcd 11619 (2012) (citing section 3 of the
Communications Act of 1934, 47 U.S.C. § 153 (“broadcasting” means “dissemination of radio communications
intended to be received by the public, directly or by the intermediary of relay stations”); Subscription Video
Services, 2 FCC Rcd 1001 (1987) (holding that subscription services are not broadcast services), aff'd sub nom.;
Nat’l Ass’n for Better Broad. v. FCC, 849 F.2d 665 (D.C. Cir. 1988)).
347
See ¶ 33 supra.
348
See DISH May 23, 2013 Ex Parte at 2-3.
349
We also find speculative DISH’s claim that the adoption of a stockholder’s rights plan as part of the amended
SoftBank/Sprint merger agreement would restrict U.S. ownership of Sprint. See, e.g., DISH June 12, 2013 Ex Parte
at 3. The Applicants note that nothing in the stockholder’s rights plan “says anything about whether U.S. citizens or
corporations can own Sprint stock . . . [and that] nothing in those provisions precludes anyone from making a bona
fide offer to acquire all of Sprint.” Applicants June 13, 2013 Ex Parte at 2.
350
SoftBank is a stock company or kabushiki kaisha, which is analogous to a general business corporation in the
United States. Petition at 10.
351
See Tokyo Stock Exchange, FAQs: What are the TSE markets?/What does 1st/2nd section refer to?, available at
http://www.tse.or.jp/english/faq/list/general/g_b.html (“The first section is for the largest, most successful
companies – often referred to as ‘blue chips.’”) (last visited Apr. 11, 2013).
Federal Communications Commission FCC 13-92
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outstanding (excluding treasury shares) and all SoftBank shares have equal voting rights.
352
SoftBank’s
world headquarters are located in Tokyo, Japan; the majority of its tangible property is located in Japan;
and the vast majority of its sales and revenues is derived from Japan.
353
Mr. Son, a citizen of Japan,
SoftBank’s founder, Chairman, Chief Executive Officer, and its largest shareholder, holds 22.49 percent
of SoftBank’s issued and outstanding shares.
354
Four of SoftBank’s eight member board of directors are
Japanese citizens, and the remaining members are comprised of individuals from WTO Member countries
– two from the United States, one from India, and one from China.
355
115. SoftBank commissioned Japan Shareholder Services, Ltd. (JSS) to analyze its
shareholder composition and identify the beneficial owners of the shares and their associated voting rights
(JSS Study) based on SoftBank’s shareholder registry list as of March 31, 2012.
356
JSS reviewed
SoftBank’s shareholder records to determine the citizenship of SoftBank’s shares. It first reviewed the
citizenship and address information in its records for both individual and institutional shareholders, e.g.,
mutual funds and pension funds, that hold shares for their own accounts.
357
It then used information
obtained from Georgeson, Inc., a provider of proxy services that maintains shareholder information for
use in soliciting proxies, to determine the citizenship and addresses of the underlying owners of shares
held by nominees. JSS’s analysis included a review of individual non-Japanese shareholders to determine
whether they were citizens of WTO Member countries based on the best available information. JSS did
not rely on the citizenship of the nominees in making its citizenship determinations.
358
352
Petition, Attachment D (Declaration of Masato Suzaki) at 1.
353
Petition at 10 (citing SoftBank, Annual Report, 54-55 (2012)) and Attachment C.
354
Petition at 10. Mr. Masayoshi Son’s 22.49 percent ownership interest in SoftBank includes the 21.09 percent of
SoftBank shares that he owns directly and the 1.40 percent he owns indirectly. Petition at 10, n.17. The Petition
notes that only Mr. Son holds more than 10 percent of SoftBank. However, the 310(b)(4) Petitioners also state that a
recent public securities report in Japan analogous to the SEC Form 13D indicates that each of four entities affiliated
with The Capital Group Companies, Inc. (Capital Group) beneficially owns interests in SoftBank below 10 percent
but that reportedly aggregate to 10.04 percent of SoftBank’s stock. Petition at 10, 11, n.20. These Capital Group
affiliates hold SoftBank stock as follows: (1) Capital Research and Management Company (8.34%), (2) Capital
Guardian Trust Company (1.39%), (3) Capital International Limited (0.16%), and (4) Capital International Inc.
(0.14%). The 310(b)(4) Petitioners state that the address of each of these entities is in the United States, except for
Capital International Limited, whose address is in the United Kingdom, also a WTO Member country. Id.
355
Petition at 10 (citing SoftBank, Annual Report, 54-55 (2012)).
356
Petition at 11, n.21 and Attachment D (noting that SoftBank relied on its regular business records concerning
shareholders and their addresses); Applicants Feb. 27 Ex Parte, Exhibit 1 (Imade Declaration) at 1 (stating, among
other things, that (1) the shareholder registry classifies each shareholder into categories such as
individual/corporation and Japanese Resident/Non-Japanese Resident, (2) all shareholders are listed with their
nationality on the shareholder registry list, and (3) the classification between Japanese and Non-Japanese Residents
is determined based on data of the actual domicile of the beneficial owner provided by the Japanese Resident
shareholder or based on the standing proxy’s data on the domicile of the beneficial owner in cases where the
shareholder is not domiciled in Japan. In the case of Non-Japanese Resident shareholders, the identities of the
shareholders were obtained from JSS’s shareholder survey partner, and JSS used available information on the
individual institutional investors obtained from public and other sources, e.g., tax documents (including tax
exemption register applications) submitted by Japanese investment trust companies and other sources as a way to
confirm the domicile of those companies.).
357
Petition, Attachment D at 1.
358
Petition, Attachment D at 1-2; Applicants Feb. 27, 2013 Ex Parte, Exhibit 1. When citizenship information was
not otherwise available for individual shareholders, JSS used the underlying shareholder address provided by the
beneficial owners. Petition at 12, n.23 (citing Mobile Satellite Ventures Subsidiary, LLC, Petition for Declaratory
(continued….)
Federal Communications Commission FCC 13-92
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116. The JSS Study, completed on November 9, 2012, concluded that (1) 47.25 percent of
SoftBank shares were held by residents of Japan (excluding foreign corporations that have a Japanese
residence), (2) 15.83 percent were held by Japanese trust banks, and (3) 36.92 percent were held by non-
Japanese corporations and individuals (including foreign corporations that have a Japanese residence), of
which 35.35 percent were held by non-Japanese corporations that did not hold such shares through
American Depository Receipts (“ADRs”).
359
The 310(b)(4) Petitioners state that of the 47.25 percent of
SoftBank shares held by Japanese residents, 82.35 percent were held by individuals (representing 38.91
percent of all issued and outstanding shares), and 17.65 percent were held by corporations (representing
8.35 percent of all issued and outstanding shares).
360
The 310(b)(4) Petitioners further state that the trust
banks are primarily ultimately owned and controlled by Japanese citizens,
361
and that of the 15.83 percent
held by Japanese trust banks, 95.5 percent (or 15.12 percent of total SoftBank shares) were held by
citizens of WTO Member countries.
362
Of the 35.35 percent of the shares held by non-Japanese
corporations that did not hold shares through ADRs, at least 85.12 percent (or 30.09 percent of total
SoftBank shares) were held by citizens from WTO Member countries.
363
(Continued from previous page)
Ruling Under Section 310 of the Communications Act, as Amended, File No. ISP-PDR-20070314-0004, at 14, n.44
(filed Mar. 14, 2007); Mobile Satellite Ventures Subsidiary LLC and SkyTerra Communications, Inc. Petition for
Declaratory Ruling Under Section 310(b) of the Communications Act of 1934, as amended, Order and Declaratory
Ruling, 23 FCC Rcd 4436 (2008) (“2008 MSV Order”)).
359
Petition, Attachment D at Attachment A (Breakdown of SoftBank Shareholders). For a definition of ADRs, see
American Depositary Receipts, U.S. Securities and Exchange Commission, at http://www.sec.gov/answers/adrs.htm
(“The stocks of most foreign companies that trade in the U.S. markets are traded as ADRs. U.S. depositary banks
issue these stocks. Each ADR represents one or more shares of foreign stock or a fraction of a share. If you own an
ADR, you have the right to obtain the foreign stock it represents, but U.S. investors usually find it more convenient
to own the ADR. The price of an ADR corresponds to the price of the foreign stock in its home market, adjusted to
the ratio of the ADRs to foreign company shares.”).
360
Applicants Feb. 27, 2013 Ex Parte, Exhibit 1 at 2.
361
The two exceptions are State Street Trust and Banking Co., Ltd. and Société Générale Private Banking Japan,
which are subsidiaries of financial firms in which a U.S. and a French financial group, respectively, have interests.
The total number of shares held by these two nominal shareholders is less than 200,000 shares, which, as of the end
of March 2012, accounted for less than 0.02 percent of all issued and outstanding shares of SoftBank. Applicants
Feb. 27, 2013 Ex Parte, Exhibit 1 at 3.
362
In classifying the trust bank holdings in SoftBank as WTO or non-WTO Member investment, JSS considered
both the citizenship of the persons holding the authority to vote the shares and the citizenship of persons holding the
authority to make investment decisions over the shares representing the equity interests. Applicants Feb. 27, 2013
Ex Parte, Exhibit 1 at 4.
363
Petition, Attachment D at 2. SoftBank Apr. 8 Letter at Attachment A (Supplemental SoftBank Ownership
Information) (providing the following breakdown by country of the 30.09 percent of SoftBank shares held by WTO-
based foreign corporations outside of Japan other than ADR holders, rounded to the nearest 1/100
th
percent: (1)
United States (19.79%); (2) United Kingdom (4.98%); (3) Norway (0.98%); (4) Switzerland (0.96%); (5) France
(0.74%); (6) Singapore (0.58%); (7) British Virgin Islands (0.46%); (8) Canada (0.29%); (9) Netherlands (0.26%);
(10) United Arab Emirates (0.23%); (11) Saudi Arabia (0.19%); (12) Sweden (0.16%); (13) Germany (0.13%); (14)
Ireland (0.09%); (15) Italy (0.07%); (16) Denmark (0.06%); (17) Japan (0.04%); (18) Belgium (0.03%); (19) Brunei
(0.02%); (20) Luxembourg (0.01%); (21) Hong Kong (China) (0.01%); (22) Spain (0.01%); and (23) Australia,
Austria, Finland, Lichtenstein, Oman, South Africa, and Taiwan (collectively 0.016%)). . SoftBank notes that
because the British Virgin Islands is an overseas territory of the United Kingdom, the Commission treats it as a
WTO Member country for purposes of its public interest analysis under section 310(b)(4) of the Act. Id. (citing
Stratos Global Corp. and Robert M. Franklin, Consolidated Applications for Consent to Transfer of Control,
Memorandum Opinion and Order and Declaratory Ruling, 22 FCC Rcd 21328, 21366, ¶ 93, n.255 (2007)).
Federal Communications Commission FCC 13-92
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117. The 310(b)(4) Petitioners state that in sum, SoftBank investors from WTO Member
countries hold 92.46 percent (at least 1.015 billion shares) of SoftBank’s equity and voting interests, and
that investors from non-WTO Member countries hold no more than 7.54 percent (no more than 83 million
shares) of its equity and voting rights.
364
The 310(b)(4) Petitioners state that this 7.54 percent includes (1)
approximately 5.26 percent of SoftBank shares held by foreign companies that were not held through
ADRs or were otherwise held through nominees for which citizenship information for the ultimate
beneficial owners was not available, (2) 1.56 percent of SoftBank shares held by ADR holders, foreigners
with Japanese residence, and foreign individuals that were not otherwise identifiable, and (3) 0.71 percent
shares of indeterminate nationality.
365
118. In accordance with Commission precedent,
366
we calculate the following indirect equity
and voting interests that SoftBank’s shareholders would hold in Sprint (through Starburst I)
367
upon
closing as a result of SoftBank’s 78 percent equity and voting interest in post-transaction Sprint: (1)
SoftBank investors from WTO Member countries, including the United States, (collectively, 72.12
percent equity and 92.46 percent voting interests)
368
and (2) SoftBank investors from non-WTO Member
countries, including investors of indeterminate nationality (5.88 percent equity and 7.54 percent voting
interests).
369
Consistent with Commission precedent, we treat unidentified interests as investment from
364
Petition at 11, Attachment D at 2 and Attachment A (Breakdown of SoftBank Shareholders) (noting that there is
a 0.01% difference due to rounding).
365
Petition at 11-12, n.22.
366
In calculating attributable alien equity interests in a parent company, the Commission uses a “multiplier” to
dilute the percentage of each investor’s equity interest in the parent company when those interests are held through
intervening companies. The multiplier is applied to each link in the vertical ownership chain, regardless of whether
any particular link in the chain represents a controlling interest in the company positioned in the next lower tier. See
BBC License Subsidiary, 10 FCC Rcd at 10973-74, ¶¶ 24-25. By contrast, in calculating alien voting interests in a
parent company, the multiplier is not applied to any link in the vertical ownership chain that constitutes a controlling
interest in the company positioned in the next lower tier. Id. at 10973, ¶ 23; see also Request for Declaratory Ruling
Concerning the Citizenship Requirements of Sections 310(b)(3) and (4) of the Communications Act of 1934, as
Amended, Declaratory Ruling, 103 F.C.C. 2d 511, 522, ¶ 19 (1985), recon. in part, 1 FCC Rcd 12 (1986). In
circumstances where the voting interests in the U.S. parent of a common carrier licensee are held through
intervening partnerships, a general partner is considered to hold the same voting interest as the partnership holds in
the company positioned below it. Similarly, in the absence of a demonstration that a limited partner effectively is
insulated from active involvement in partnership affairs, a limited partner will be deemed to hold the same voting
interest as the partnership holds in the company positioned below it. See Applications of XO Communications, Inc.,
IB Docket No. 02-50, Memorandum Opinion, Order and Authorization, 17 FCC Rcd 19212, 19221-23, ¶¶ 22, 25
(Int’l Bur., WCB, and WTB 2002).
367
We find that Starburst I has its principal places of business in either the United States or Japan, both of which are
WTO Member countries. Starburst I, a newly formed corporation, is organized in the United States, and its
investment principals, officers, and directors are citizens of Japan. Petition at Attachment C (Principal Place of
Business Showing for Starburst I, Starburst II, and SoftBank).
368
See note 366 supra. We derive the 72.12 percent equity interest by multiplying the sum of the equity interests
held by SoftBank investors from the United States and from other WTO Member countries (92.46%) by SoftBank’s
proposed equity interest in Sprint through Starburst I (78%) (92.46% x 78%= 72.12%). See note 366 supra
(describing use of the “multiplier” to calculate foreign equity interests when they are held through intervening
companies). By contrast, we treat voting interests held by SoftBank investors from WTO Member countries as a
92.46 percent voting interest in Sprint because SoftBank’s proposed 78 percent interest in Sprint (through Starburst
I) would constitute a controlling interest. Id.
369
We again employ a “multiplier” to calculate the equity interests (but not the voting interests) that would be held
indirectly in Sprint by SoftBank’s investors from non-WTO Member countries, including unknown shareholders –
(continued….)
Federal Communications Commission FCC 13-92
50
non-WTO Member countries.
370
Based on the record before us and pursuant to section 310(b)(4) of the
Act and the policies adopted in the Foreign Participation Order,
371
we find that the vast majority of
foreign ownership interests that would be held by SoftBank’s shareholders in Sprint and its Licensee
Subsidiaries are properly treated as investment from WTO Member countries except for the 5.88 percent
equity and 7.54 percent voting interests from investors from non-WTO Member countries and investors
of indeterminate nationality.
372
119. Sprint Foreign Ownership. Sprint is a publicly traded Kansas corporation with its
principal executive and administrative offices in Overland Park, Kansas.
373
Sprint states that, in
accordance with Commission requirements, it studies the geographic origins of the beneficial ownership
of its shares to ensure ongoing compliance with foreign ownership restrictions.
374
For example, the
310(b)(4) Petitioners noted that a study conducted by Thomson Reuters indicates that as of February 25,
2011, (1) approximately 19.04 percent of Sprint’s issued and outstanding stock is held by non-U.S.
individuals and entities, (2) the majority of that 19.04 percent is held by individuals and entities from
WTO Member countries, and (3) an aggregate 2.7 percent of Sprint’s stock is held by individuals and
entities with home markets in non-WTO Member countries.
375
120. In response to a request from the International Bureau for more recent ownership
information, Sprint retained K&L Gates LLP (“K&L Gates”) to review its shareholder list as of
December 31, 2012, to verify that at least 75 percent of its common stock is held by U.S. shareholders.
376
During its review, K&L Gates used the following criteria to determine whether a shareholder is a U.S.
shareholder: (1) any individual if he or she is a U.S. citizen, (2) any bank, insurance company, pension
plan, and foundation/endowment if it is organized in the United States and controlled by U.S. citizens,
and (3) any private equity fund and management investment company that has its principal place of
business in the United States, taking into consideration: (i) the country of its world headquarters, (ii) tax
jurisdiction, (iii) the country of its incorporation, organization or charter, (iv) the citizenship or principal
(Continued from previous page)
that is, we multiply the percentage of their equity interests by the 78 percent equity interest SoftBank would hold in
Sprint Corporation (through Starburst I) upon closing. See note 366 supra. Accordingly, we calculate SoftBank’s
investors from non-WTO Member countries, including unknown shareholders, as holding a 5.88 percent indirect
equity interests in Sprint (7.54% x 78%= 5.88% equity). We did not require SoftBank to identify all of its non-
WTO shareholders holding more than 0.1 percent as DISH requested because the 310(b)(4) Petitioners have
properly categorized these ownership interests as non-WTO Member country investment in accordance with our
policies and precedent and, in any event, such interests do not exceed 25 percent. See DISH Reply at 33.
370
See, e.g., 2008 MSV Order, 23 FCC Rcd at 4442, ¶ 14 (“[W]e treat the 0.02 percent equity and voting interest
held indirectly in MSV by the non-U.S., non-Canadian shareholders of BCE, Inc. as non-WTO investment because
we do not have adequate information as to their citizenship or principal places of business.”).
371
Foreign Participation Order, 12 FCC Rcd 23891; see, e.g., Verizon Wireless-ALLTEL Order, 23 FCC Rcd at
17541-46, ¶¶ 221-32, pet. for recon. denied, FCC 11-122, 26 FCC Rcd 11763 (2011); Verizon Wireless-RCC Order,
23 FCC Rcd at 2525-26, ¶ 149, pet. for recon. dismissed, FCC 11-122, 26 FCC Rcd 11763 (2011); Iridium Holdings
LLC and Iridium Carrier Holdings LLC, Transferors, and GHL Acquisition Corp., Transferee, IB Docket No. 08-
232, Memorandum Opinion and Order and Declaratory Ruling, 24 FCC Rcd 10725, 10743-45, ¶¶ 41-43 (Int’l Bur.
2009) (“2009 Iridium Order”).
372
See, e.g., 2008 MSV Order, 23 FCC Rcd at 4442, ¶ 14.
373
Petition at 5.
374
Id. at 6.
375
Id. at 6; Applicants Feb. 27, 2013 Ex Parte, Exhibit 2 at 1.
376
Sprint Apr. 4, 2013 Ex Parte.
Federal Communications Commission FCC 13-92
51
place of business of its controlling principals, directors and/or investment managers, and (v) the countries
from which the funds being managed were contributed.
377
K&L Gates concluded that as of December 31,
2012, at least 75 percent (77.56 percent) of the issued and outstanding shares of Sprint’s common stock
are held by U.S. shareholders. K&L Gates did not provide definitive ownership information for the
remaining shareholders of Sprint.
378
121. Based on the record before us and pursuant to section 310(b)(4) of the Act and the
policies adopted in the Foreign Participation Order,
379
we find that, upon closing, Sprint’s U.S.
shareholders would hold an indirect 17.06 percent equity and voting interest (77.56 percent x 22 percent)
in the Licensee Subsidiaries. We also find that unidentified Sprint shareholders would hold, upon
closing, an indirect 4.94 percent equity and voting interest (22.44 percent x 22 percent) in the Licensee
Subsidiaries. Consistent with Commission precedent, we treat such unidentified interests as investment
from non-WTO Member countries.
380
122. In sum, we ascribe to non-WTO shareholders of SoftBank (including unknown
shareholders) an aggregate 5.88 percent equity interest and 7.54 percent voting interest in Sprint. Adding
the 4.94 percent equity and voting interests that we calculate for unidentified Sprint shareholders, we
calculate total non-WTO investment in Sprint, upon closing, as 10.82 percent of its equity interests and
12.48 percent of its voting interests.
C. Declaratory Ruling
123. Based on our analysis of the information contained in the record of this proceeding, we
find that at least 75 percent of the equity and voting interests that would be held indirectly in the Licensee
Subsidiaries upon closing are properly ascribed to individuals or entities that are citizens of, or that
principally conduct business in, WTO Member countries for purposes of our public interest analysis
under section 310(b)(4) of the Act and the policies adopted in the Foreign Participation Order. The
310(b)(4) Petitioners are therefore entitled to a rebuttable presumption that indirect foreign ownership of
the Licensee Subsidiaries through Sprint upon closing does not pose a risk to competition in the U.S.
market.
381
We find no evidence in the record that rebuts this presumption. Moreover, as we explained
377
K&L Gates Analysis at 1. According to K&L Gates, it used information made available by Sprint, as well as
information from Secretary of State websites, Westlaw, Lexis, the SEC’s EDGAR database, Securities Mosaic,
Form ADVs (retrieved from the SEC’s Investment Advisor Public Disclosure database), the Federal Reserve
National Information Center, Bloomberg Financial, Capital IQ, Hoovers, Accurint, PitchBook, and institutional
shareholder websites and media. Id. at 2-4. For details on the methodology used by K&L Gates, see K&L Gates
Analysis.
378
K&L Gates reached the 75 percent U.S. shareholder threshold during the course of investigating the largest 350
institutional shareholders of Sprint. K&L Gates notes that of those 350 shareholders, it identified and verified 259
institutional shareholders of Sprint whose aggregate holdings represent approximately 85.54 percent of Sprint’s
outstanding shares (with U.S. shareholders holding 77.56% of the total outstanding shares). K&L Gates Analysis at
5, n.8. In the course of its research, K&L Gates made note of investors from non-U.S. jurisdictions, i.e., Canada
(1.96%); Norway (1.81%), the United Kingdom (1.24%), Japan (0.8%), Switzerland (0.57%), Germany (0.51%),
France (0.51%), the Netherlands (0.48%), and Hong Kong (0.10%). However, K&L Gates did not reach definitive
conclusions regarding the citizenship or principal places of business for these non-U.S. shareholders. Id. at 5, n.7.
379
See, e.g., Verizon Wireless-ALLTEL Order, 23 FCC Rcd at 17541-46, ¶¶ 221-32, pet. for recon. denied, FCC 11-
122, 26 FCC Rcd 11763 (2011); Verizon Wireless-RCC Order, 23 FCC Rcd at 2525-26, ¶ 149, pet. for recon.
dismissed, FCC 11-122, 26 FCC Rcd 11763 (2011); 2009 Iridium Order, 24 FCC Rcd at 10743-45, ¶¶ 41-43.
380
See, e.g., 2008 MSV Order, 23 FCC Rcd at 4442, ¶ 14.
381
See Foreign Participation Order, 12 FCC Rcd at 23896, ¶ 9, 23913, ¶ 50, 23940, ¶¶ 111-112. In adopting this
presumption in the Foreign Participation Order, the Commission explained that it applies “only to competition
(continued….)
Federal Communications Commission FCC 13-92
52
above, several parties support the proposed indirect foreign ownership from the instant transactions,
382
we
have determined that the proposed transactions would result in public interest benefits, and we find no
basis to conclude that the proposed transactions is likely to harm competition.
383
As we discuss in Section
VIII below, based on the record in the proceeding we find that any national security, law enforcement and
other related concerns have been adequately addressed.
124. Accordingly, pursuant to the policies established by the Commission’s Foreign
Participation Order, we find that it would not serve the public interest to prohibit the indirect foreign
ownership of the Licensee Subsidiaries in excess of the 25 percent benchmark in section 310(b)(4) of the
Act. Specifically, this ruling permits the Licensee Subsidiaries to be 100 percent owned indirectly, as a
result of the foreign ownership interests held in Sprint, the controlling U.S. parent of the Licensee
Subsidiaries, upon closing, by SoftBank (individually) and by SoftBank’s shareholders (collectively,
including Mr. Son). The Licensee Subsidiaries may accept up to and including an additional, aggregate
25 percent equity and/or voting interests from these foreign investors and other foreign investors without
seeking prior Commission approval, subject to the following conditions. First, the Licensee Subsidiaries
shall obtain prior Commission approval before any foreign individual or entity acquires a direct or
indirect equity and/or voting interest in post-transaction Sprint in excess of 25 percent. Second, the
Licensee Subsidiaries shall obtain prior Commission approval before Sprint’s direct or indirect equity
and/or voting interests from non-WTO Member countries (including interests from unidentified investors)
post-transaction exceed 25 percent.
384
The Licensee Subsidiaries have an affirmative duty to monitor
their foreign equity and voting interests, calculate these interests consistent with the attribution principles
enunciated by the Commission, and otherwise ensure continuing compliance with the provisions of
section 310(b)(4) of the Act.
385
VIII. NATIONAL SECURITY, LAW ENFORCEMENT, FOREIGN POLICY, AND TRADE
CONCERNS
125. Background. When analyzing a transfer of control or assignment application in which
foreign investment is an issue, we also consider public interest issues related to national security, law
enforcement, foreign policy, or trade policy concerns.
386
The Commission has recognized its public
(Continued from previous page)
concerns that may arise because of a foreign carrier’s market power in a foreign market.” Foreign Participation
Order, 12 FCC Rcd at 23916-17, ¶ 57. The Commission stated that, because common carrier wireless markets are,
“for the most part, wholly domestic, there is no possibility of leveraging foreign bottlenecks in order to create
advantages for some competitors in U.S. markets.” Id. at 23940, ¶ 112. See also Foreign Ownership Second Report
and Order, 28 FCC Rcd at 5756, ¶ 24 (confirming the Commission’s prior finding of no risk of leveraging foreign
bottlenecks into U.S. domestic wireless markets).
382
See supra ¶ 110 and accompanying notes.
383
See Sections V-VI supra; see also Foreign Participation Order, 12 FCC Rcd at 23905-09, ¶¶ 33-41. In this
regard, we are not persuaded by DISH’s arguments that the presumption would be rebutted by the amount of
spectrum being aggregated; SoftBank’s plans to use the spectrum; the “unproven” public interest benefits from the
transaction; and “the windfall that SoftBank would enjoy if Sprint still owes the U.S. Treasury an anti-windfall
payment.” DISH Reply at 3-6, 10-32. As noted above, we have found the proposed transaction to be in the public
interest. See Sections V-VI supra.
384
See ¶ 122 supra and accompanying notes (discussion of unidentified shareholders).
385
See Applications of Cellco Partnership d/b/a Verizon Wireless and AT&T, Inc., WT Docket No. 09-121,
Memorandum Opinion and Order and Declaratory Ruling, 25 FCC Rcd 10985, 11024, ¶ 99 (Int’l Bur. and WTB
2010); 2008 MSV Order at 4443, ¶ 16; America Móvil Order, 22 FCC Rcd at 6225, ¶ 68.
386
See Foreign Participation Order, 12 FCC Rcd at 23918-21, ¶¶ 59-66. See also Foreign Ownership Policies
Second Report and Order, 28 FCC Rcd at 5792 n. 255 (2013) (“The Commission has previously held that,
(continued….)
Federal Communications Commission FCC 13-92
53
interest analysis would benefit from input by the Executive Branch agencies which have expertise in these
issues. In particular, the Commission accords an appropriate level of deference to Executive Branch
agencies’ unique expertise on national security and law enforcement issues.
387
Accordingly, the
Commission considers any concerns raised by Executive Branch agencies, but the Commission makes an
independent decision on the applications based on the record in the proceeding.
388
126. Comments. Several parties contend that the proposed transactions raise national security
concerns that merit close scrutiny. CWA raises concerns regarding SoftBank’s and Clearwire’s “close
association” with Chinese equipment vendors, Huawei Technologies and ZTE Corporation, noting the
recommendations of the U.S. House of Representatives’ Permanent Select Committee on Intelligence
regarding these companies in order to protect U.S. security interests.
389
In this regard, CWA urges the
Commission and national security agencies to take seriously the concerns and recommendations of the
House Intelligence Committee during the review of the proposed transactions, and, at a minimum, place
restrictions on the use of Huawei equipment in Sprint/Clearwire networks.
390
DISH urges us to include
national security concerns as part of our foreign ownership analysis and requests that we grant the
transactions on the condition that all of Sprint’s Network Operations Centers (NOCs) be located in the
United States.
391
127. In response, the Applicants state that the well-established regulatory process of review by
the relevant Executive Branch agencies and the Committee on Foreign Investment in the United States
(CFIUS) would address national security concerns
392
and that there is no need for the Commission to
engage in its own inquiry regarding national security issues and impose its own conditions.
393
On May
29, 2013, the Applicants announced that CFIUS found that there are no unresolved national security
issues associated with SoftBank’s proposed acquisition of a controlling interest in Sprint and SoftBank’s
(Continued from previous page)
regardless of the applicability of sections 310(a) and 310(b), the Commission considers, pursuant to sections 308
and 310(d) of the Act, national security, law enforcement, foreign policy and trade policy concerns when analyzing
an application in which foreign ownership is involved.”).
387
Foreign Participation Order, 12 FCC Rcd at 23919, ¶ 62.
388
Id. at 23921, ¶ 66. See also Foreign Ownership Policies Second Report and Order, 28 FCC at 5762, ¶ 34
(“While the Commission has exercised its discretion to rely substantially on the views of Executive Branch agencies
for their expertise on matters of national security, law enforcement, foreign policy and trade policy in cases
involving foreign investment in U.S. common carrier and aeronautical licensees, we do not believe it would be
appropriate for us essentially to delegate this statutory responsibility to such agencies.”).
389
CWA Petition at 11-14, n.41.
390
CWA Petition at 14 (citing Chairman Mike Rogers and Ranking Member C.A. Dutch Ruppersberger of the
Permanent Select Committee on Intelligence, U.S. House of Representatives, Investigative Report on the U.S.
National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE (Oct. 8. 2012),
available at http://intelligence.house.gov/sites/intelligence.house.gov/files/documents/Huawei-
ZTE%20Investigative%20Report%20%28FINAL%29.pdf (last visited Apr. 11, 2013)).
391
DISH Reply at 34.
392
Joint Opposition at 22-24. Applicants state that with regard to concerns about the use Huawei equipment,
SoftBank’s telecommunications companies – SoftBank Mobile, SoftBank BB, and SoftBank Telecom – do not use
Huawei equipment in their core network infrastructure, but only in a network of an affiliate, Wireless City Planning,
Inc., in which case, Huawei equipment is used only at the edge of the network. Id.
393
Applicants March 12, 2013 Ex Parte. Applicants note that the argument raised by DISH in its reply regarding
this issue is procedurally improper because it cannot be raised for the first time on reply. Id. at 4, n.4.
Federal Communications Commission FCC 13-92
54
resulting indirect ownership of Clearwire Corporation.
394
As a precondition to CFIUS clearance of the
transaction, Applicants state that CFIUS required them to enter into a National Security Agreement with
DOD, DHS and DOJ (the “USG Parties”). According to the Applicants the National Security Agreement
(“NSA”) provides, among other things, that:
• SoftBank and Sprint must appoint an independent member to the post-transaction Sprint board
of directors to serve as the Security Director. The Security Director will be approved by the USG
Parties, oversee Sprint’s compliance with the National Security Agreement and serve as a contact
for the USG Parties on all security-related matters. In addition, the Security Director is required
to have expertise and experience with national security matters, be a U.S. resident citizen, and
hold appropriate security clearances.
• Once Sprint either obtains operational control of Clearwire or consummates its proposed
acquisition of Clearwire, USG Parties will have a one-time right to require Sprint to remove and
decommission by December 31, 2016 certain equipment deployed in the Clearwire network.
• The USG Parties will have the right to review and approve certain network equipment vendors
and managed services providers of Sprint, as well as of Clearwire once Sprint completes its
proposed acquisition of Clearwire.
395
128. On June 7, 2013, DOJ, including the FBI, with the concurrence of DHS, filed a letter
(collectively, the “Agencies”) stating that they have reviewed the information provided to them by the
Applicants and analyzed the measures undertaken by the Applicants to address potential national security,
law enforcement, and public safety issues, including supply chain issues.
396
Based on their review, the
Agencies have no objection to grant of the applications.
397
129. On June 9, 2013, the Applicants filed additional information regarding the NSA,
including declarations from the officers of Starburst II and Sprint that signed the NSA as well as the
clearance letters from the Department of the Treasury.
398
The Applicants state that the terms of the NSA
address the national security issues raised in this proceeding as well as the concerns of the Agencies. As
to the issue of the equipment used in Sprint and Clearwire networks raised by CWA, the Applicants note
that under the NSA the U.S. Government will have a one-time right to require Sprint to remove and
decommission certain equipment deployed in the Clearwire network and the U.S. Government will have
the right to review and approve certain network equipment vendors and managed services providers of
Sprint, as well as of Clearwire once Sprint completes its proposed acquisition of Clearwire.
399
Regarding
the location of Sprint’s NOCs, an issue raised by DISH, the Applicants state that concerns regarding
SoftBank’s control over Sprint’s NOCs have been specifically addressed in the NSA to the satisfaction of
394
See Sprint Nextel Corporation, SEC 8-K Filing (May 29, 2013), available at
http://www.sec.gov/Archives/edgar/data/101830/000119312513238554/d545797d8k.htm.
395
Id.
396
Letter from Richard Sofield, Director, Foreign Investment Review Staff, National Security Division, U.S.
Department of Justice, to Marlene H. Dortch, Secretary, FCC, dated June 7, 2013 (“DOJ June 7, 2013 Ex Parte”).
397
Id.
398
Letter from Regina M. Keeney, counsel for Sprint Nextel Corporation, and John R. Feore, counsel for SoftBank
Corp., to Marlene H. Dortch, Secretary, FCC, dated June 9, 2013 (“Applicants June 9, 2013 Ex Parte”).
399
Id. at 2.
Federal Communications Commission FCC 13-92
55
the Agencies.
400
The Applicants also note that retired Admiral Mike Mullen, former Chairman of the
Chiefs of Staff, will serve Security Director on the Sprint Board and be the point of contact for the U.S.
Government on security matters on the post-transaction Sprint board.
401
130. Discussion. We find that there are no public interest harms to the proposed transactions
due to national security concerns. As we discussed above, in assessing the public interest, we take into
account the record developed in each particular case and accord appropriate deference to the expertise of
the Executive Branch agencies in analyzing national security, law enforcement and other concerns related
to foreign ownership of Commission licensees. In this case the Agencies have analyzed the measures
taken by the Applicants to address potential national security, law enforcement, and public safety issues,
including supply chain issues and have advised us they do not object to grant of the applications.
402
131. Based on the record, we find that the national security issues raised in this proceeding –
i.e., concerns regarding equipment vendors and the location on the Sprint NOCs – have been adequately
addressed. As to the allegations made by DISH regarding whether Sprint already has de facto control of
Clearwire and thus key provisions of the NSA are inoperable,
403
we find in Section IX that Sprint does not
currently have de facto control of Clearwire.
404
Thus, we find that DISH’s allegations have no merit. We
therefore conclude that we do not need to take further action in this proceeding to address national
security issues.
IX. ORDER ON RECONSIDERATION
132. In this section, we address two petitions that seek reconsideration of the Bureau-level
decision that granted, pursuant to our pro forma procedures, applications to transfer the Clearwire shares
held by Eagle River Holdings, LLC (“Eagle River”) to Sprint.
405
We address these petitions pursuant to a
section 1.106 referral from the Wireless Bureau.
406
133. Background. Eagle River was one of the original equity holders in Clearwire in 2008.
407
In accordance with the provisions of the Clearwire Equityholders’ Agreement, on October 17, 2012,
400
Id.
401
Id. at 2-3; Attachment (Sprint news release dated June 7, 2013).
402
DOJ June 7, 2013 Ex Parte.
403
Letter from Pantelis Michalopoulos, counsel for DISH Network Corporation, to Marlene H. Dortch, Secretary,
FCC, dated June 4, 2013 (“DISH June 4, 2013 Ex Parte”); DISH June 11, 2013 Ex Parte; see contra Applicants
June 9, 2013 Ex Parte at 3.
404
See Section IX infra.
405
See Crest Financial Limited Petition for Reconsideration, ULS File No. 0005480932 (filed Jan. 10, 2013) (“Crest
Petition for Reconsideration”); see also Petition of DISH Network L.L.C. for Reconsideration, ULS File No.
0005480932 (filed Jan. 11, 2013) (“DISH Petition for Reconsideration”).
406
See 47 C.F.R. § 1.106(a)(1) (providing that “[p]etitions requesting reconsideration of other final actions taken
pursuant to delegated authority will be acted on by the designated authority or referred by such authority to the
Commission”).
407
See Equityholders’ Agreement By and Among Clearwire Corporation, Sprint Holdco, LLC, Eagle River
Holdings, LLC, Intel Capital Wireless Investment Corporation 2008A, Intel Capital Wireless Investment
Corporation 2008B, Intel Capital Wireless Investment Corporation 2008C, Intel Capital Corporation, Intel Capital
(Cayman) Corporation, Middlefield Ventures, Inc., Comcast Wireless Investment I, Inc., Comcast Wireless
Investment II, Inc., Comcast Wireless Investment III, Inc., Comcast Wireless Investment IV, Inc., Comcast Wireless
Investment V, Inc., Google Inc., TWC Wireless Holdings I LLC, TWC Wireless Holdings II LLC, TWC Wireless
(continued….)
Federal Communications Commission FCC 13-92
56
Eagle River sent a notice to Sprint and certain other parties offering to sell its entire shareholdings in
Clearwire.
408
On October 18, 2012, Sprint disclosed in an SEC filing its intent under the Agreement to
acquire 100 percent of the Clearwire shares being offered by Eagle River for $100 million and thereby
increase Sprint’s stake in the company from 48.1 percent to 50.45 percent.
409
We note that the
Commission, in a 2008 decision,
410
previously approved an application that permitted Sprint to hold a 51
percent ownership interest in Clearwire, though Sprint’s equity interest in Clearwire was lowered to less
than 50 percent in 2011.
411
134. Consistent with Sprint’s stated intent to acquire the Eagle River shares, Clearwire filed
the applications associated with the proposed transfer of Eagle River’s holdings to Sprint on November
15, 2012.
412
The applications indicated that they involved a pro forma transfer of control, and sought
Commission approval prior to the closing of the proposed transfer of Eagle River’s holdings. The Bureau
granted consent to the applications on December 6, 2012,
413
and the transaction was consummated later
that month.
414
The Dec. 27, 2012 Public Notice, which extended the pleading cycle in the broader
SoftBank/Sprint proceeding, discussed the pro forma Eagle River transfer, stating that the Commission
approved that transaction pursuant to pro forma procedures and explaining that the transaction “did not
give Sprint de facto control” under the terms of an Equityholders’ Agreement entered into by Sprint and
other major Clearwire stockholders.
415
135. In January 2013, Crest
416
and DISH
417
each filed a petition for reconsideration of the
Bureau’s pro forma processing of this transaction, requesting that the Commission instead treat the Eagle
(Continued from previous page)
Holdings III LLC, and BHN Spectrum Investments, LLC (dated as of Nov. 28, 2008) at 1 (“Clearwire
Equityholders’ Agreement”).
408
ULS File No. 0005480932, Application for Pro Forma Transfer of Control of Clearwire Spectrum Holdings LLC
From Clearwire Corporation to Clearwire Corporation, Exhibit A at 1 (filed Nov. 15, 2012) (“Eagle River Lead Pro
Forma Application”); Clearwire Corporation Schedule 13D/A, Amendment No. 14 to Schedule 13D filed on
December 5, 2008, at 5 (dated Oct. 17, 2012) (“Clearwire Schedule 13D/A”). The referenced ULS application is the
lead application submitted to the Commission for the 79 wireless applications filed in connection with the transfer of
the Eagle River holdings to Sprint.
409
See Clearwire Schedule 13D/A Ex. 99.30; see also Eagle River Lead Pro Forma Application, Exhibit A at 1.
410
See Sprint Nextel-Clearwire Order, 23 FCC Rcd 17570.
411
See Sprint Nextel Corporation, Quarterly Report (Form 10-Q), at 11 (June 30, 2011).
412
Three manually-filed applications, attached to ULS File No. 0005480932, were received by the Commission’s
office in Gettysburg on November 16, 2012.
413
Wireless Telecommunications Bureau Assignment of License Authorization Applications, Transfer of Control of
Licensee Applications, De Facto Transfer Lease Applications and Spectrum Manager Lease Notifications,
Designated Entity Reportable Eligibility Event Applications, and Designated Entity Annual Reports Action, Public
Notice, Rpt. Nos. 8300, 8300A, 8300B, 8300C (rel. Dec. 12, 2012).
414
The proposed transaction was consummated on December 11, 2012, and consummation notices were filed with
the Commission on December 12, 2012.
415
Dec. 27, 2012 Public Notice, 27 FCC Rcd at 16057.
416
Crest Petition for Reconsideration. Crest also filed a reply with respect to its petition for reconsideration. Reply
of Crest Financial Limited in Support of Petition for Reconsideration, ULS File No. 0005480932 (filed Jan. 22,
2013) (“Crest Reconsideration Reply”). Crest represents that it is a long-term investor in Clearwire that, with its
affiliates and related persons, owns approximately 8.34 percent of Clearwire’s outstanding Class A common stock.
Crest Petition for Reconsideration at 2.
Federal Communications Commission FCC 13-92
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River applications as involving a substantive transfer of control requiring a public notice and an
opportunity for comment by interested parties in advance of Commission action. Crest also requests that
the Commission consider the applications in association with Sprint’s proposed acquisition of all
Clearwire shares and SoftBank’s proposed acquisition of control of Sprint.
418
Crest asserts that the Eagle
River transaction is not subject to pro forma processing because the transaction gave Sprint both de jure
and de facto control over Clearwire, in part because Sprint gained the power to appoint a majority of the
Clearwire board, without having to fill any of its seats with independent directors.
419
Crest also alleges
that the Eagle River transaction was the first step in Sprint’s effort to acquire 100 percent ownership of
Clearwire.
420
Crest claims that Sprint now has the ability to forcibly cash out minority shareholders and
to block any proposed or potential alternative transactions.
421
Crest requests that the Commission or the
Bureau reconsider the decision to grant the Eagle River applications on delegated authority on a pro
forma basis, and instead place the applications on prior public notice and consider the applications in
association with Sprint’s proposed acquisition of all Clearwire shares and SoftBank’s proposed
acquisition of control of Sprint.
422
136. DISH claims that the Eagle River applications were improperly processed as pro forma
transactions and were not eligible for processing under the Commission’s immediate approval
procedures.
423
In particular, DISH asserts that the Eagle River transaction does not qualify as pro forma
because Sprint did not have any form of control over Clearwire prior to its acquisition of the Eagle River
holdings
424
and the transaction does not otherwise qualify as pro forma under the FCBA Forbearance
Order.
425
According to DISH, the Eagle River transaction must be viewed as substantial even if the
Commission previously approved Sprint holding de jure control of Clearwire, since Sprint had
relinquished such control.
426
DISH also claims that the applications do not qualify for the Commission’s
immediate approval procedures, which “are limited to those transactions that do not involve a wireless
service that may be used to provide interconnected mobile voice and/or data services,” and that Clearwire
does not qualify under such policies because it provides such services.
427
DISH also takes the position
(Continued from previous page)
417
DISH Petition for Reconsideration. DISH also filed a reply regarding its petition for reconsideration. Reply of
DISH Network L.L.C. to Opposition of Clearwire Corporation to Petition for Reconsideration, ULS File No.
0005480932 (filed Jan. 29, 2013) (“DISH Reconsideration Reply”). DISH has submitted its own offer to acquire
Clearwire. DISH Petition for Reconsideration at 3-4.
418
Crest Petition for Reconsideration at 2.
419
Id. at 1-2, 7-8; Crest Reconsideration Reply at 5-7.
420
Crest Petition for Reconsideration at 2; Crest Reconsideration Reply at 2, 3.
421
Crest Petition for Reconsideration at 10; Crest Reconsideration Reply at 2.
422
Crest Petition for Reconsideration at 2.
423
DISH Petition for Reconsideration at 1-3.
424
DISH takes the position that Sprint did not have de facto control of Clearwire prior to the Eagle River
transaction, and does not now have such de facto control over Clearwire. DISH Petition for Reconsideration at 6.
But see DISH Reconsideration Reply at 7, n.22 (“Crest Financial alleges that Sprint does have [de facto] control
[over Clearwire], and Sprint refutes it. DISH takes no position on this question.”).
425
DISH Petition for Reconsideration at 2, citing Federal Communications Bar Association’s Petition for
Forbearance from Section 310(d) of the Communications Act, Memorandum Opinion and Order, 13 FCC Rcd 6293
(1998) (“FCBA Forbearance Order”), 4-10.
426
DISH Petition for Reconsideration at 7-8.
427
Id. at 2-3, 10-11.
Federal Communications Commission FCC 13-92
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that Sprint rushed to acquire de jure control over Clearwire, thus circumventing and prejudging the
Commission’s review of a substantial aggregation of spectrum.
428
137. Clearwire filed separate oppositions to each of the Crest and DISH petitions for
reconsideration.
429
In those oppositions, Clearwire reiterates its position that, because the Eagle River
transaction permitted Sprint to reacquire previously Commission-approved de jure control of Clearwire
but did not confer de facto control of Clearwire, the associated applications were appropriately treated on
a pro forma basis.
430
Clearwire alleges that, contrary to the claims made by Crest, the Clearwire
Equityholders’ Agreement requires that a majority of disinterested Clearwire directors must approve a
transaction between Clearwire and a related party, such as Sprint.
431
Clearwire further asserts that grant
of the Eagle River applications did not change the fact that de facto control of Clearwire is vested in
Clearwire’s management and the Clearwire board of directors as a whole.
432
Clearwire also takes the
position that, under Commission precedent, the fact that Sprint has certain veto powers that constitute
permissible investor protection rights does not provide Sprint with de facto control of Clearwire.
433
138. Clearwire disputes the claim that if the Commission knew that the Eagle River
transaction was in fact the first step in Sprint’s effort to acquire ownership of all of Clearwire, the
Commission would not have treated the Eagle River transaction as pro forma.
434
According to Clearwire,
the Commission considers only the transaction before it, so even if the Commission knew that Sprint and
Clearwire were imminently going to announce the proposed acquisition of all of Clearwire’s stock by
Sprint, it would not have affected the Commission’s application of pro forma procedures to the Eagle
River applications.
435
139. Clearwire asserts that DISH’s claims that the Eagle River applications should not have
been considered under the Commission’s immediate approval procedures
436
is irrelevant, since Clearwire
did not seek use of those procedures and the Commission did not employ them.
437
Also, according to
Clearwire, it is irrelevant that the Eagle River transaction does not fall within any of the six categories
428
Id. at 11-14.
429
Opposition of Clearwire Corporation (filed Jan. 14, 2013) (“Clearwire Crest Opposition”); Opposition of
Clearwire Corporation (filed Jan. 22, 2013) (“Clearwire DISH Opposition”). Since Crest had originally filed its
petition for reconsideration in IB Docket No. 12-343, the docket initially established in connection with the
proposed SoftBank/Sprint transaction, Clearwire also filed an opposition in that docket arguing that the Crest
petition for reconsideration was improperly filed in that proceeding and should be dismissed. Opposition of
Clearwire Corporation, IB Docket No. 12-343 (filed Jan. 14, 2013). Because Crest also filed its petition for
reconsideration in ULS with respect to the applications associated with the Eagle River transaction, we do not find it
necessary to address Clearwire’s request that we dismiss Crest’s originally filed petition for reconsideration.
430
Clearwire Crest Opposition at 1-2, 6-7; Clearwire DISH Opposition at 1, 3, 4-7.
431
Clearwire Crest Opposition at 3, 5, citing Clearwire Equityholders’ Agreement § 2.6(a).
432
Clearwire Crest Opposition at 5; Clearwire DISH Opposition at 3, 9-10.
433
Clearwire Crest Opposition at 6.
434
Id. at 7-8.
435
Id. at 8; Clearwire DISH Opposition at 11.
436
See 47 C.F.R. § 1.948(j)(2).
437
Clearwire DISH Opposition at 3, 10.
Federal Communications Commission FCC 13-92
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enumerated in the FCBA Forbearance Order, since Clearwire is not eligible for and did not seek review
under that order’s post-transaction notification process.
438
140. Discussion. We have reviewed the record in this proceeding, including the petitions for
reconsideration filed by Crest and DISH, their replies, the oppositions filed by Clearwire, the actions
taken by the Bureau in processing the applications, and the ULS records, and we find, for the reasons
stated below, that the Eagle River transaction was appropriately considered to be pro forma and was
processed in full accordance with the Commission’s rules. Nothing contained in the Crest or DISH
Petitions for Reconsideration supports any action reversing or modifying the Bureau’s handling of these
applications. Accordingly, we deny the petitions for reconsideration filed by Crest and DISH regarding
the applications associated with the transfer of Eagle River’s holdings in Clearwire to Sprint in December
2012.
141. Section 310(d) of the Act requires that the Commission give its prior consent before any
license or construction permit or any rights thereunder can be transferred, assigned, or disposed of.
439
Section 309(c)(2)(B) provides that the prior public notice requirements of section 309 do not apply to
applications for assignment or transfer of control under section 310(d) that do not involve a substantial
change in ownership or control.
440
Section 1.948(c)(1) of the Commission’s rules implements these
statutory provisions.”
441
A pro forma transfer of control or assignment thus may be processed by the
Commission without requiring any prior public notice.
442
Approvals of pro forma transfers, however, are
placed on public notice, and are subject to review and scrutiny pursuant, inter alia, to our petition for
reconsideration procedures. The Commission’s distinction between substantial and pro forma transfers of
control and assignments has developed in large part in Commission and Bureau orders.
142. As the Commission explained in the FCBA Forbearance Order, “there is no express rule
or ‘bright-line’ test that distinguishes those transfers and assignments of telecommunications licenses that
involve substantial changes in ownership or control and those that do not.”
443
While “[i]n general, a
substantial change in ownership or control occurs when there is a transfer of fifty percent or more of a
licensee’s stock or a transfer that results in a stockholder whose qualifications have not been passed on by
the Commission acquiring at least a fifty percent voting interest in a licensee … there are other factors
that also may be found in a particular case to substantially affect de facto control.”
444
The Commission
has further explained that “[a] change in de jure control is generally considered substantial, but if there is
an indication that de facto control has not changed, the transfer may be considered pro forma . . . . The
438
Id. at 3, 7-8.
439
47 U.S.C. § 310(d).
440
47 U.S.C. § 309(c)(2)(B).
441
47 C.F.R. § 1.948(b)(1).
442
We note that pro forma application processing is different than processing under the immediate approval rules set
forth in section 1.948(j)(2). Whether pro forma transfer of control or assignment applications may be processed
under the immediate approval rules depends upon whether the applications meet the standards set forth in that
subsection. Contrary to DISH’s argument, see DISH Petition for Reconsideration at 4, the Eagle River applications
were not processed under the immediate approval rules. The immediate approval procedures apply only when an
application is first filed; an amended application will not trigger the immediate approval procedures.
443
FCBA Forbearance Order, 13 FCC Rcd at 6298 ¶ 8 (citations omitted).
444
Id. (citations omitted).
Federal Communications Commission FCC 13-92
60
inquiry is fact specific and done on a case-by-case basis.”
445
The Commission has also noted that it looks
to the agency’s broadcast rules for guidance in determining which transactions by common carriers may
be deemed to be pro forma.
446
143. In Metromedia, Inc., the Commission restated the general test
447
but found that the
transfer of over 50 percent of the stock of Metromedia to Mr. Kluge was not substantial given Mr.
Kluge’s prior de facto control of Metromedia.
448
The Commission noted that Metromedia’s qualifications
under the de facto control of Mr. Kluge had been repeatedly reviewed and found acceptable in numerous
applications.
449
The Commission concluded that “since there is not a substantial change in the identity of
the owners (in that, inter alia, there are no new owners with substantial interests to be passed upon by the
Commission) and there is not a substantial change in control, in light of Mr. Kluge's present de facto
control, we find that there is not an ownership change which is material to the policies underlying the
substantial change in ownership clause in Section 309(c)(2)(B).”
450
144. As explained below, we find that the Bureau properly treated the Eagle River transaction
as pro forma for two independent reasons. First, the Commission had previously passed on Sprint’s
qualifications to hold a 51 percent voting interest in Clearwire and thus, under the facts of this case and
our relevant precedents, it was proper for the Bureau to treat this application as pro forma. Second, the
Bureau properly treated this application as pro forma under the facts of this case for the independent
reason that it did not give Sprint de facto control over Clearwire.
145. Prior to the Eagle River transaction, Sprint did not have control of Clearwire.
451
Pursuant
to the Eagle River transaction, Sprint acquired less than 5 percent of the equity of Clearwire,
452
with the
result that Sprint now owns over 50 percent of the equity of Clearwire. Under the standard enunciated by
Metromedia, Barnes,
453
and Clay Broadcasters,
454
this is the type of transaction that the Commission has
445
See In re 2000 Biennial Regulatory Review, Notice of Proposed Rulemaking, 15 FCC Rcd 24264, 24270 ¶ 13
(2000).
446
Id.
447
Metromedia, Inc., Memorandum Opinion and Order, 98 F.C.C.2d 300, 305 ¶ 8 (1984) (“Metromedia Order”).
The Commission cited both Barnes Enterprises, Inc., Memorandum Opinion and Order, 55 F.C.C.2d 721 (1975)
(“Barnes Order”) and Clay Broadcasters, Inc., Memorandum Opinion and Order, 21 Rad. Reg. 2d 442 (1971)
(“Clay Broadcasters Order”) in support of this statement.
448
Metromedia Order, 98 F.C.C.2d at 306 ¶ 9.
449
Id.
450
Id. at 306-07 ¶ 9.
451
See, e.g., Eagle River Lead Pro Forma Application, Exhibit A at 1; Clearwire Crest Opposition at 5; Clearwire
DISH Opposition at 9.
452
Eagle River Lead Pro Forma Application, Exhibit A at 1.
453
In Barnes, the Commission found that a transfer of control of a television station licensee from two equal 50
percent shareholders to those pre-existing shareholders each reducing their respective ownership interests to 45
percent and adding a third party holding 10 percent of the equity was properly filed on a short form application as a
pro forma transfer of control. See Barnes Order, 55 F.C.C.2d at 721, 725 (enunciating the same standard as
Metromedia and explaining that “while a percentage change of 10%, 5%, or 1% could constitute a substantial
change, . . . it would not be deemed substantial for the purposes under discussion here unless it resulted in as much
as 50% of the licensee’s stock being in the hands of a party, or parties, whose qualifications have never been passed
upon by the Commission”).
Federal Communications Commission FCC 13-92
61
routinely found to be pro forma: Less than 50 percent of the equity of Clearwire changed hands as a
result of the transaction, and the qualifications of Sprint as an equityholder in Clearwire, which as a result
of the Eagle River transaction held just over 50 percent of the equity of Clearwire, have been specifically
passed on by the Commission in 2008.
455
Neither DISH nor Crest have provided a persuasive basis for
concluding that our earlier finding regarding Sprint’s qualifications, under the facts of this case, is not
adequate to satisfy the standards enunciated in Metromedia, Clay Broadcasters, and Barnes.
146. Although Metromedia applied pro forma treatment where the entity with de facto control
of a licensee seeks to acquire de jure control, the Commission’s standard set out in that order did not,
contrary to DISH’s arguments, limit pro forma treatment to situations where an entity already has de facto
or de jure control. Rather, the standard set out by the Commission makes clear that the transfer of Eagle
River’s equity interests in Clearwire to Sprint is appropriately treated on a pro forma basis.
147. Crest alleges that Sprint obtained de facto control as a result of the transfer of the Eagle
River holdings and that the transaction was ineligible for pro forma treatment on that basis.
456
To support
its contention that Sprint obtained de facto control, Crest points to the fact that as a result of the
transaction, Sprint still appoints seven of the 13 members of the Clearwire Board of Directors, but now
does not need to include any independent board members as part of its slate of nominees.
457
Crest claims
that the Clearwire Equityholders’ Agreement does not require a super-majority vote for “any Related
Party Transaction [which would include the proposed transaction by which Sprint seeks to acquire full
ownership of Clearwire] but that only a simple majority vote is required.” Crest characterizes the Eagle
River transaction as giving Sprint, “for the first time, the power to nominate seven, non-independent
board members – a majority of the board.”
458
Crest further alleges that Sprint quickly exercised that
power after closing with Eagle River to begin to squeeze out the minority shareholders and obtain full
ownership of Clearwire.
459
148. We read the requirements of the Clearwire Equityholders’ Agreement differently than
Crest, as does Clearwire.
460
Section 2.6(a) of the Clearwire Equityholders’ Agreement provides as
follows:
In addition to any other actions or approvals required under this Agreement, Law, the
Operating Agreement, the Charter or the Bylaws, the following actions (including the
entry into any agreement, contract or commitment to take any such action) will require
the prior approval of a Simple Majority of the disinterested Directors: (i) any Related
Party Transaction.
461
Sprint’s proposal to acquire the remainder of the ownership of Clearwire falls within the definition of
(Continued from previous page)
454
In Clay Broadcasters, the Commission found that a transfer of 35.9 percent of the equity of a licensee to two pre-
existing shareholders holding 16.7 percent of the equity of the licensee was properly processed as pro forma.
455
See Sprint Nextel-Clearwire Order, 23 FCC Rcd 17570. Like Eagle River, Sprint has been an equity holder in
Clearwire since its formation in 2008. See generally Clearwire Equityholders’ Agreement.
456
Crest Petition for Reconsideration at 2, 8.
457
Id. at 7-8.
458
Id. at 8.
459
Crest Petition at 8.
460
See, e.g., Clearwire Crest Opposition at 5.
461
Clearwire Equityholders’ Agreement, § 2.6(a)(i) (emphasis added).
Federal Communications Commission FCC 13-92
62
Related Party Transaction in the Clearwire Equityholders’ Agreement.
462
Thus, Sprint’s nominees to the
Board, being interested directors, did not vote on Sprint’s offer to acquire the remaining interests in
Clearwire. Clearwire described the process by which its Board of Directors determined that the initial
proposed merger with Sprint was in the best interests of Clearwire and the non-Sprint stockholders.
463
Specifically, the Board of Directors formed a Special Committee of three directors, none of whom is
nominated by Sprint and each of whom is an independent and disinterested director of Clearwire.
464
The
Special Committee and the Audit Committee recommended to the Clearwire Board of Directors the
adoption of the merger agreement with Sprint; the six Board of Director members not designated by
Sprint and disinterested then unanimously approved the merger agreement; and, subsequently, the full
Board of Directors approved the proposed merger with Sprint.
465
149. The subsequent history of the Clearwire Board’s responses to the DISH tender offer and
the most recent Sprint offer to acquire Clearwire confirm that Sprint, through the Eagle River transaction,
did not gain de facto control of Clearwire enabling it to squeeze out minority shareholders. On May 30,
2013, DISH commenced an unsolicited cash tender offer to acquire all outstanding shares of Clearwire’s
Class A common stock at a price of $4.40 per share.
466
The Clearwire Board of Directors, after receiving
the unanimous recommendation of the Special Committee of the Board, resolved to recommend that the
holders of the Clearwire’s Class A common stock tender their shares of common stock pursuant to the
DISH tender offer and vote against the Sprint offer.
467
150. Following the increase in Sprint’s offer for the remaining shares of Clearwire to $5.00 on
June 20, 2013, the Special Committee then recommended that the Clearwire Board of Directors approve
the amended agreement with Sprint and recommend that shareholders not tender their shares to DISH.
468
The Clearwire Board of Directors voted to recommend that shareholders vote in favor of this revised offer
and not tender their shares to DISH.
469
151. Accordingly, the basic premise on which Crest relies to support its claim that Sprint
gained de facto control of Clearwire through the Eagle River transaction is flawed. Crest and DISH have
presented no other evidence or claim that undercuts the representation of Clearwire that there has been no
change in the de facto control of Clearwire, which was and continued to be held after the Eagle River
transaction by Clearwire management and the Clearwire Board of Directors.
470
152. While we thus find that the Bureau properly treated Sprint’s application to acquire the
Eagle River shares as pro forma, we note that many of the concerns raised by Crest and DISH are
462
Clearwire Equityholders’ Agreement, Exhibit A, Definitions.
463
Clearwire Apr. 15 Ex Parte.
464
Id. at 1.
465
Id. at 2.
466
Clearwire Corporation Schedule 14A at 2 (dated June 13, 2013).
467
Id. at 2, S-7.
468
Clearwire Corporation Schedule 14D-9 (Amendment No. 2) at 3 (dated June 24, 2013).
469
Id. On June 26, 2013, DISH withdrew its tender offer for Clearwire shares. DISH Network Announces
Withdrawal of Clearwire Tender Offer, DISH News Release dated June 26, 2103, available at
http://dish.client.shareholder.com/releasedetail.cfm?ReleaseID=774018.
470
See, e.g., Clearwire Crest Opposition at 5. In light of the discussion in the text, we see no need to take further
steps in response to recent DISH requests that the Commission investigate and make a factual determination whether
Sprint Nextel has de facto control over Clearwire. DISH June 4, 2013 Ex Parte; DISH June 11, 2013 Ex Parte.
Federal Communications Commission FCC 13-92
63
procedural in nature. Crest and DISH expressed concern that the use of pro forma procedures in this case
would undermine the purpose of the Commission’s rules by allowing Sprint to avoid full public scrutiny
of the transaction.
471
For this reason, DISH and Crest urged the full Commission to review the Eagle
River transaction in the context of the broader SoftBank/Sprint transaction and to allow parties to express
their views in that setting.
153. We find that our treatment of the Eagle River transaction amply addresses these
procedural considerations. Pursuant to a section 1.106 referral from the Bureau,
472
the full Commission
has considered the petitions for reconsideration of the Eagle River transaction, and we are doing so in
connection with our decision on the broader SoftBank/Sprint transaction, including our finding above that
the broader transaction, which does give Sprint de facto control over Clearwire, is in the public interest
and otherwise satisfies the requirements of the Communications Act. DISH and Crest, along with any
other interested party, have had ample opportunity to submit comments or other pleadings regarding
Sprint’s acquisition of Clearwire shares both in response to the broader transaction and the narrower
Eagle River transaction.
473
We have fully considered all of those views in reaching our determinations
today. We thus find no merit in Crest and DISH’s suggestion that the use of pro forma procedures
somehow deprived them or any other party of a full and fair opportunity to challenge the application
regarding Sprint’s acquisition of Eagle River’s Clearwire shares. We do not find that Crest or DISH have
shown any prejudice from the procedures used in this case.
154. For the reasons stated above, we deny the petitions for reconsideration filed by Crest and
DISH and affirm that the Eagle River applications were properly processed on a pro forma basis.
X. CONCLUSION
155. Upon review of the Applications and the record in this proceeding, we conclude that
approval of the proposed transactions, subject to the conditions set forth herein, is in the public interest.
We find that the proposed transactions are not likely to result generally in competitive or other public
interest harms in the provision of mobile wireless services. We also anticipate that there are public
interest benefits that likely would result from the proposed transaction, and thus we conclude that the
transaction is in the public interest. In addition, based upon our analysis of the proposed foreign
ownership in this case, we conclude that it would not serve the public interest to prohibit the indirect
foreign ownership of the Licensee Subsidiaries, subject to the conditions set forth in this Memorandum
Opinion and Order, Declaratory Ruling, and Order on Reconsideration.
XI. ORDERING CLAUSES
156. ACCORDINGLY, having reviewed the Applications and the record in this proceeding,
IT IS ORDERED that, pursuant to sections 4(i) and (j), 214, 303(b), 303(r), 309, 310(b), and 310(d) of
the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 214, 303(b), 303(r), 309,
310(b), 310(d), and the Cable Landing License Act, 47 U.S.C. §§ 34-39, the applications for the transfer
of control of various wireless licenses and leases, domestic section 214 authority, international section
214 authorizations, earth station authorizations, interests in submarine cable licenses, and cable television
relay service station licenses from Sprint and Clearwire to SoftBank are GRANTED, to the extent
specified in this Memorandum Opinion and Order, Declaratory Ruling, and Order on Reconsideration and
471
DISH Petition for Reconsideration at 7; Crest Petition for Reconsideration at 8-9 (emphasizing its concern that
the Eagle River transaction was addressed at the staff, rather than Commission level).
472
47 C.F.R. § 1.106.
473
Indeed, as noted above, the public notice that extended the pleading cycle in the SoftBank/Sprint matter
expressly referenced the pro forma treatment of the Eagle River application.
Federal Communications Commission FCC 13-92
64
subject to the conditions specified herein.
157. IT IS FURTHER ORDERED that the above grant shall include authority for Softbank to
acquire control of: (a) any license or authorization issued to Sprint and/or Clearwire or their subsidiaries
during the Commission’s consideration of the transfer of control applications or during the period
required for consummation of the transaction following approval; (b) any applications or lease
notifications that are pending at the time of consummation; and (c) any leases of spectrum that Sprint
and/or Clearwire or their subsidiaries enter into while this transaction is pending before the Commission
or the period required for consummation.
158. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), 303(b), and 310(b)(4)
of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 303(b), 310(b)(4), and
section 1.2 of the Commission’s rules, 47 C.F.R. § 1.2, the Petition for Declaratory Ruling filed by the
310(b)(4) Petitioners is GRANTED to the extent specified in this Memorandum Opinion and Order,
Declaratory Ruling, and Order on Reconsideration.
159. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), 214, 303(b), 303(r),
309, 310(b), and 310(d) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), (j), 214,
303(b), 303(r), 309, 310(b), and 310(d), that grant of the Applications IS CONDITIONED UPON
SoftBank and the post-transaction Sprint Corporation assuming, as specified herein, all obligations of
Sprint with respect to the reconfiguration of the 800 MHz band, including without limitation, those set out
in Improving Public Safety Communications in the 800 MHz Band, Report and Order, Fifth Report and
Order, Fourth Memorandum Opinion and Order, 19 FCC Rcd 14969 (2004), and subsequent Commission
orders in WT Docket 02-55.
160. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), 303(b), 303(r), 309,
310(b), 310(d), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j),
303(b), 303(r), 309, 310(b), 310(d), and 405, and section 1.106 of the Commission’s rules, 47 C.F.R. §
1.106, the Petitions for Reconsideration of DISH and Crest are DENIED.
161. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and (j), 303(b), 303(r), 309,
310(b), 310(d), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j),
303(b), 303(r), 309, 310(b), 310(d), and 405, and section 1.106 of the Commission’s rules, 47 C.F.R. §
1.106, the Request to Hold the Proceeding in Abeyance filed by DISH is DISMISSED as moot.
162. IT IS FURTHER ORDERED that this Memorandum Opinion and Order, Declaratory
Ruling, and Order on Reconsideration SHALL BE EFFECTIVE upon release. Petitions for
reconsideration under section 1.106 of the Commission’s rules, 47 C.F.R. § 1.106, may be filed within 30
days of the date of public notice of this Memorandum Opinion and Order and Declaratory Ruling.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Federal Communications Commission FCC 13-92
APPENDIX A
List of Applications
I. Transfer of Control of Wireless Licenses and Leases
File No. Licensee/Lessee Transferee Call Sign/Lease
0005481298 Nextel of California, Inc. Starburst II, Inc. L000007829
0005483180 SprintCom, Inc. Starburst II, Inc. KNLF294
0005483246 WirelessCo, L.P. Starburst II, Inc. KNLF204
0005486287 Southwest PCS LP Starburst II, Inc. WPOM237
0005486296 Unrestricted Subsidiary
Funding Company
Starburst II, Inc. KNLB205
0005486299 Sprint Communications
Company L.P.
Starburst II, Inc. KA86929
0005486304 Nextel WIP Expansion Corp. Starburst II, Inc. KNBF694
0005486305 Nextel WIP Expansion Two
Corp.
Starburst II, Inc. KNBF688
0005486310 Sprint United Management
Company
Starburst II, Inc. WQJW879
0005486314 NEXTEL WEST CORP. Starburst II, Inc. WNEH926
0005486322 Sprint Administrative Services Starburst II, Inc. WPPD279
0005486345 People's Choice TV Corp. Starburst II, Inc. WOJ40
0005486348 Washington Oregon Wireless Starburst II, Inc. WPQP251
0005486413 ACI 900, INC. Starburst II, Inc. KNNT454
0005486454 Texas Telecommunications, LP Starburst II, Inc. WPQW641
0005486466 FCI 900, Inc. Starburst II, Inc. KNNK884
0005486485 Nextel License Holdings 5, Inc. Starburst II, Inc. KNNQ491
0005486493 Nextel of California, Inc. Starburst II, Inc. KA80961
0005486505 APC PCS, LLC Starburst II, Inc. KNLF200
0005486518 Nextel of New York, Inc. Starburst II, Inc. KNBP728
0005486532 PHILLIECO, L.P. Starburst II, Inc. KNLF219
0005486546 Nextel of Texas, Inc. Starburst II, Inc. KNAN853
0005486561 Nextel Communications of the
Mid-Atlantic, Inc.
Starburst II, Inc. KGH265
0005486804 Sprint PCS License, L.L.C. Starburst II, Inc. KNLF201
0005486807 Nextel WIP License Corp Starburst II, Inc. KNBU442
0005486821 Nextel License Holdings 1, Inc. Starburst II, Inc. KED872
0005486830 Louisiana Unwired, LLC Starburst II, Inc. KNLG891
0005486858 Northern PCS Services, LLC Starburst II, Inc. WLN993
0005486868 Machine License Holding,
LLC
Starburst II, Inc. KNNX611
0005486882 Nextel License Holdings 2, Inc. Starburst II, Inc. KNAH939
0005486883 Horizon Personal
Communications, Inc.
Starburst II, Inc. KNLF580
0005486891 NEXTEL LICENSE
HOLDINGS 3, INC.
Starburst II, Inc. KNAN862
Federal Communications Commission FCC 13-92
2
0005486899 APC Realty and Equipment
Co. LLC
Starburst II, Inc. WPSH342
0005486904 Nextel License Holdings 4, Inc. Starburst II, Inc. KAQ916
0005486932 Sprint Telephony PCS, L.P. Starburst II, Inc. WPON274
0005487019 UbiquiTel Leasing Company Starburst II, Inc. WPRR391
0005487031 Sprint Spectrum, L.P. Starburst II, Inc. WPNH350
0005487724 FCI 900, Inc. Starburst II, Inc. L000000028
0005487725 Nextel of Texas, Inc. Starburst II, Inc. L000001843
0005487726 Nextel License Holdings 1, Inc. Starburst II, Inc. L000000022
0005491530 Clearwire Spectrum Holdings
LLC
Starburst II, Inc. B266
0005491538 CLEARWIRE SPECTRUM
HOLDINGS LLC
Starburst II, Inc. L000000253
0005491570 Clearwire Spectrum Holdings
III,LLC
Starburst II, Inc. L000005241
0005491578 Fixed Wireless Holdings, LLC Starburst II, Inc. B012
0005491579 Fixed Wireless Holdings, LLC Starburst II, Inc. L000000159
0005491582 Clearwire Hawaii Partners
Spectrum LLC
Starburst II, Inc. B192
0005491585 Clearwire Hawaii Partners
Spectrum LLC
Starburst II, Inc. L000001566
0005491587 Alda Wireless Holdings, LLC Starburst II, Inc. WLW697
0005491589 Alda Wireless Holdings, LLC Starburst II, Inc. L000000268
0005491591 American Telecasting
Development, LLC
Starburst II, Inc. B002
0005491596 American Telecasting
Development, LLC
Starburst II, Inc. L000000259
0005491600 AMERICAN TELECASTING
OF ANCHORAGE, LLC
Starburst II, Inc. WMX713
0005491601 American Telecasting of
Anchorage, LLC
Starburst II, Inc. L000002488
0005491603 American Telecasting of Bend,
LLC
Starburst II, Inc. WMX668
0005491608 AMERICAN TELECASTING
OF COLUMBUS, LLC
Starburst II, Inc. B095
0005491612 American Telecasting of
Columbus, LLC
Starburst II, Inc. L000001638
0005491616 American Telecasting of
Denver, LLC
Starburst II, Inc. L000002648
0005491621 American Telecasting of Fort
Myers, LLC
Starburst II, Inc. L000002337
0005491624 American Telecasting of Fort
Collins, LLC
Starburst II, Inc. B149
0005491628 American Telecasting of Ft.
Collins, LLC
Starburst II, Inc. L000002395
0005491631 American Telecasting of Green
Bay, LLC
Starburst II, Inc. B018
0005491633 American Telecasting of Green
Bay, LLC
Starburst II, Inc. L000002048
Federal Communications Commission FCC 13-92
3
0005491636 American Telecasting of
Lansing, LLC
Starburst II, Inc. B241
0005491644 American Telecasting of
Lansing, LLC
Starburst II, Inc. L000002690
0005491657 American Telecasting of
Lincoln, LLC
Starburst II, Inc. B256
0005491658 American Telecasting of
Lincoln, LLC
Starburst II, Inc. L000002703
0005491660 American Telecasting of Little
Rock, LLC
Starburst II, Inc. L000000186
0005491662 American Telecasting of
Louisville, LLC
Starburst II, Inc. L000000262
0005491666 AMERICAN TELECASTING
OF MEDFORD, LLC
Starburst II, Inc. B288
0005491670 American Telecasting of
Medford, LLC
Starburst II, Inc. L000002516
0005491673 American Telecasting of
Michiana, LLC
Starburst II, Inc. B126
0005491676 American Telecasting of
Michiana, LLC
Starburst II, Inc. L000001625
0005491681 American Telecasting of
Monterey, LLC
Starburst II, Inc. B397
0005491687 American Telecasting of
Monterey, LLC
Starburst II, Inc. L000000225
0005491690 American Telecasting of
Redding, LLC
Starburst II, Inc. B371
0005491697 American Telecasting of
Redding, LLC
Starburst II, Inc. L000002487
0005491699 American Telecasting of Santa
Barbara, LLC
Starburst II, Inc. L000003594
0005491701 American Telecasting of
Seattle, LLC
Starburst II, Inc. WLX546
0005491707 American Telecasting of
Seattle, LLC
Starburst II, Inc. L000002685
0005491711 American Telecasting of
Sheridan, LLC
Starburst II, Inc. L000002493
0005491713 American Telecasting of Yuba
City, LLC
Starburst II, Inc. B485
0005491714 American Telecasting of Yuba
City, LLC
Starburst II, Inc. L000002700
0005491718 ATI Sub, LLC. Starburst II, Inc. WNTJ727
0005491719 ATI Sub, LLC Starburst II, Inc. L000003928
0005491722 ATL MDS, LLC. Starburst II, Inc. B043
0005491725 Bay Area Cablevision, LLC Starburst II, Inc. L000002688
0005491726 Broadcast Cable, LLC Starburst II, Inc. WLW814
0005491727 Broadcast Cable, LLC Starburst II, Inc. L000002011
0005491729 Fresno MMDS Associates,
LLC
Starburst II, Inc. L000000485
Federal Communications Commission FCC 13-92
4
0005491730 KENNEWICK LICENSING,
LLC
Starburst II, Inc. L000005239
0005491732 NSAC, LLC Starburst II, Inc. B003
0005491734 NSAC, LLC Starburst II, Inc. L000000168
0005491736 PCTV Gold II, LLC Starburst II, Inc. B011
0005491739 PCTV Gold II, LLC Starburst II, Inc. L000000193
0005491742 PCTV Sub, LLC Starburst II, Inc. L000003929
0005491748 People's Choice TV of
Albuquerque, LLC
Starburst II, Inc. KFK32
0005491751 People's Choice TV of
Albuquerque, LLC
Starburst II, Inc. L000001777
0005491752 People's Choice TV of
Houston, LLC
Starburst II, Inc. L000001677
0005491754 People's Choice TV of St.
Louis, LLC
Starburst II, Inc. L000002312
0005491763 SCC X, LLC Starburst II, Inc. B157
0005491786 SpeedChoice of Detroit LLC Starburst II, Inc. L000001759
0005491810 SpeedChoice of Phoenix, LLC Starburst II, Inc. L000001990
0005491834 Sprint (Bay Area), LLC Starburst II, Inc. WHT700
0005491854 SPRINT (BAY AREA) LLC Starburst II, Inc. L000000341
0005491865 TDI Acquisition Sub, LLC Starburst II, Inc. WMI303
0005491881 TDI Acquisition Sub, LLC Starburst II, Inc. L000003926
0005491887 Transworld Telecom II, LLC Starburst II, Inc. L000003931
0005491893 WBSFP Licensing LLC Starburst II, Inc. B152
0005491910 WBSY Licensing, LLC Starburst II, Inc. B228
0005491914 WBSY Licensing LLC Starburst II, Inc. L000003476
0005491916 WCOF, LLC Starburst II, Inc. L000004050
0005491919 WBS of America, LLC Starburst II, Inc. L000004063
0005491920 WIRELESS BROADBAND
SERVICES OF AMERICA,
L.L.C.
Starburst II, Inc. WPOP325
0005491923 Wireless Broadband Services
of America, LLC
Starburst II, Inc. L000001595
0005491927 WBS of Sacramento, LLC Starburst II, Inc. L000000468
0005493069 Clearwire Spectrum Holdings
III, LLC
Starburst II, Inc. B020
0005495637 Clearwire Spectrum Holdings
II LLC
Starburst II, Inc. B024
0005495949 Clearwire Spectrum Holdings
II, LLC
Starburst II, Inc. L000000886
6010EDSL13
1
Clearwire Spectrum Holdings
III, LLC
Starburst II, Inc. L000009772
6011EDSL13
2
Clearwire Spectrum Holdings
III, LLC
Starburst II, Inc. L000003688
1
This manual application is attached to ULS File No. 0005483246.
2
This manual application is attached to ULS File No. 0005483246.
Federal Communications Commission FCC 13-92
5
6012EDSL13
3
Clearwire Spectrum Holdings
III, LLC
Starburst II, Inc. L000008887
II. Transfer of Control of Domestic Section 214 Authority
File No. Authorization Holder Transferee Authorization Number
IB Docket No. 12-343 Sprint Communications
Co., L.P.
SoftBank and
Starburst II
N/A
III. Transfer of Control of International Section 214 Authorizations
File No. Authorization Holder Transferee Authorization Number
ITC-T/C-20121116-00297 Helio, LLC Starburst II ITC-214-20050812-00320
ITC-T/C-20121116-00298 ASC Telecom, Inc. Starburst II ITC-214-19941209-00368
ITC-T/C-20121116-00299 Nextel Communications.
Inc.
Starburst II ITC-214-19970723-00428
ITC-T/C-20121116-00300 Nextel Partners, Inc. Starburst II ITC-214-20010501-00277
ITC-T/C-20121116-00301 Phillieco, L.P. Starburst II ITC-214-19991203-00766
ITC-T/C-20121116-00302 Sprint Spectrum Holding
Company, L.P.
Starburst II ITC-214-19960308-00105
ITC-T/C-20121116-00303 SprintCom, Inc. Starburst II ITC-214-19991110-00692
ITC-T/C-20121116-00304 US Telecom, Inc. Starburst II ITC-214-19851107-00004
ITC-T/C-20121116-00305 Virgin Mobile U.S.A.,
L.P.
Starburst II ITC-214-20020422-00194
ITC-T/C-20121116-00306 Sprint Communications
Co., LP
Starburst II ITC-214-20100623-00263
(lead authorization)
IV. Transfer of Control of Earth Station Authorizations
File No. Authorization Holder Transferee Call Signs
SES-T/C-20121116-01029 Nextel Communications
of the Mid-Atlantic, Inc.
Starburst II E060148, E060147, E040169
SES-T/C-20121116-01031 Sprint Communications
Co., LP
Starburst II E6241, E6777, KA231,
KA232
V. Transfer of Control of Interests Held in Submarine Cable Landing Licenses
File No. Interest Holder Transferee Authorization Number
3
This manual application is attached to ULS File No. 0005483246.
Federal Communications Commission FCC 13-92
6
SCL-T/C-20121116-00014 Sprint Communications
Co., LP
Starburst II SCL-LIC-19920201-00010
SCL-LIC-19921101-00011
SCL-LIC-19950818-00003
SCL-LIC-19970413-00017
SCL-LIC-19980301-00037
SCL-LIC-19980501-00038
SCL-MOD-20071130-00020
SCL-MOD-20040301-00011
SCL-MOD-20110928-00028
VI. Transfer of Control of Cable Television Relay Service (CARS) Licenses
File No. Authorization Holder Transferee Call Signs
CAR-20121123AA-09 Fixed Wireless Holdings, LLC Starburst II WLY-681
CAR-20121121AB-09 Fixed Wireless Holdings, LLC Starburst II WLY-803
VII. Petition for Declaratory Ruling under Section 310(b)(4)
File No. Petitioners
ISP-PDR-20121115-00007 Sprint, SoftBank, Starburst I, Starburst II
Federal Communications Commission FCC 13-92
APPENDIX B
List of Filings
1
Filings Related to the Transfer of Control Applications
? Petitions to Deny or Impose Conditions
o Communications Workers of America
o Consortium for Public Education and the Roman Catholic Diocese of Erie, Pennsylvania
(“EBS Petitioners”)
o Crest Financial Limited
o Crow Creek Sioux Tribe Authority
o Line Systems, Inc. (subsequently withdrawn)
o nWire, LLC; Pac-West Telecomm, Inc.; and Tex-Link Communications, Inc.
(collectively, the “CLEC Petitioners”)
o Taran Asset Management
? Comments
o Consortium for Public Education and the Roman Catholic Diocese of Erie, Pennsylvania
o EBS Licensees
o The Greenlining Institute
o The New Jersey Division of Rate Counsel
o North American Catholic Educations Programming Foundation, Inc.
o Verizon Wireless
? Oppositions to Petitions to Deny
o Catholic Television Network and the National EBS Association
o Clarendon Foundation, Inc.
o EBS Parties
o Hispanic Information and Telecommunications Network, Inc.
o School Board of Pinellas County, Florida
o Sprint Nextel Corporation, SOFTBANK CORP., Starburst I, Inc., and Starburst II, Inc.
o Tarrant County College
o The Source for Learning, Inc.
? Replies
o Catholic Television Network and National EBS Association
o Consortium for Public Education and the Roman Catholic Diocese of Erie, Pennsylvania
o Crest Financial Limited
o DISH Network, L.L.C.
o Sprint Nextel Corporation, SOFTBANK CORP., Starburst I, Inc. and Starburst II, Inc.
o Taran Asset Management
o The Greenlining Institute
o The New Jersey Division of Rate Counsel
o The Office of Development of the Oglala Sioux Tribe
o Verizon Wireless
Filings Related to the Request to Hold the Proceeding in Abeyance
? Request to Hold the Proceeding in Abeyance
o DISH Network, L.L.C.
1
All filings in this proceeding may be found in the Commission’s Electronic Comment Filing System, ECFS, by
entering IB Docket No. 12-343 under “Proceeding” at http://apps.fcc.gov/ecfs/comment_search/input?z=3r1nh.
Federal Communications Commission FCC 13-92
2
? Oppositions
o Crest Financial Limited
o Sprint Nextel Corporation, Starburst II, Inc., and SOFTBANK CORP.
o Steven A. Zecola
? Supplement to Request to Hold Proceeding in Abeyance
o DISH Network, L.L.C.
? Opposition to Supplement to Request to Hold Proceeding in Abeyance
o Sprint Nextel Corporation, SOFTBANK CORP. and Starburst II, Inc.
o Clearwire Corporation
Filings Related to Eagle River Transaction
? Petition for Reconsideration
o Crest Financial Limited
o DISH Network, L.L.C.
? Opposition
o Clearwire Corporation
? Reply
o Crest Financial Limited
o DISH Network, L.L.C.
Federal Communications Commission FCC 13-92
STATEMENT OF
ACTING CHAIRWOMAN MIGNON CLYBURN
Re: Applications of SOFTBANK CORP., Starburst II, Inc., Sprint Nextel Corporation, and Clearwire
Corporation For Consent to Transfer Control of Licenses and Authorizations, IB Docket No. 12-
343, Petitions for Reconsideration of Applications of Clearwire Corporation for Pro Forma
Transfer of Control, ULS File Nos. 0005480932, et al.
Today is a good day for all Americans who use mobile broadband services. After thorough
review, the Commission has found that the proposed Softbank-Sprint-Clearwire transactions would serve
the public interest. The increased investment in Sprint’s and Clearwire’s networks is likely to accelerate
deployment of mobile broadband services and enhance competition in the mobile marketplace, promoting
customer choice, innovation and lower prices. In addition, the order finds that the indirect foreign
ownership of Sprint complies with Section 310 of the Communications Act. I am pleased that the
Commission was able to act in a timely manner, voting to adopt an order within two weeks of the parties
providing the Commission notice of the revised terms of their transactions.
Federal Communications Commission FCC 13-92
2
STATEMENT OF
COMMISSIONER AJIT PAI
Re: Applications of SOFTBANK CORP., Starburst II, Inc., Sprint Nextel Corporation, and Clearwire
Corporation for Consent to Transfer Control of Licenses and Authorizations, IB Docket No. 12-
343; Petitions for Reconsideration of Applications of Clearwire Corporation for Pro Forma
Transfer of Control, ULS File Nos. 0005480932, et al.
With our action today, SoftBank can consummate its $21.6 billion acquisition of Sprint, and
Sprint’s $3.7 billion acquisition of the outstanding shares in Clearwire can move forward. That’s good
for America’s wireless consumers, who stand to benefit from an invigorated company better able to
deliver advanced wireless products and services. That’s good for American companies, as we’ve now
shown that regulation need not impede access to the international financial markets and foreign capital.
And that’s strong evidence that the American wireless market is competitive—were it otherwise, an
investment of this magnitude in a non-dominant competitor would give new meaning to the term “risk
capital.”
I’m pleased that today’s order rejects conditions that aren’t transaction-specific. That result is
especially meaningful here, where the total amount of mobile broadband spectrum attributed to Sprint did
not change as a result of the transaction. This will be an important precedent as we consider other
spectrum-related transactions.
A point on process. In under a week, the proposed order was circulated, my colleagues
graciously accommodated my suggested changes, and we adopted the final order. Our prompt disposition
of this matter underscores the importance of codifying the 180-day shot clock in our rules. Even though
we quickly reviewed this order and rendered judgment, we still exceeded our self-imposed deadline by 35
days. Codifying the deadline would help us meet it, which in turn would give the parties and the public
more confidence that the agency is acting with dispatch.